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R v Leach

 

[2018] QCA 131

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

R v Leach [2018] QCA 131

PARTIES:

R
v
LEACH, Philip Denis
(appellant)

FILE NO:

CA No 124 of 2017

DC No 1479 of 2013

DIVISION:

Court of Appeal

PROCEEDING:

Appeal against Conviction

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane – Date of Conviction: 15 May 2017 (Shanahan DCJ)

DELIVERED ON:

22 June 2018

DELIVERED AT:

Brisbane

HEARING DATE:

7 February 2018

JUDGES:

Sofronoff P and Philippides JA and Applegarth J

ORDERS:

  1. Appeal allowed.
  2. Convictions quashed.
  3. Retrial ordered.

CATCHWORDS:

CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – OTHER MATTERS – where the appellant was compulsorily examined by auditors from the Australian Tax Office (“ATO”) – where subsequent investigations by the ATO led to his examination being included as part of a brief of evidence to the Commonwealth Director of Public Prosecutions (“CDPP”) – where the appellant was subsequently charged with Commonwealth tax offences and also a count of fraud under the Criminal Code (Qld) for misappropriating funds held in a solicitor’s trust account on behalf of an estate – where money from trust account used to repay ATO – where the appellant applied for a permanent stay on the grounds that the release of his compulsorily obtained examination to the CDPP was unauthorised – whether the primary judge erred in law in not granting a permanent stay of the prosecution, or in not making orders to ensure that the prosecution proceed without any advantage from the compulsorily obtained evidence

CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – OTHER MATTERS – where the primary judge refused to order separate trials for the State fraud count and the Commonwealth offences – whether the primary judge erred in refusing the application

CRIMINAL LAW – APPEAL AND NEW TRIAL – MISCARRIAGE OF JUSTICE – PARTICULAR CIRCUMSTANCES NOT AMOUNTING TO MISCARRIAGE – MISDIRECTION OR NON-DIRECTION – where the appellant contends that the trial judge erred in not leaving a defence under exculpatory provisions s 22 of the Criminal Code (Qld) and ss 9.1, 9.2 and 9.5 of the Criminal Code (Cth) to the jury – where proof of the appellant’s dishonesty displaced the exculpatory provisions – whether the trial judge was required to direct the jury in terms of those provisions

CRIMINAL LAW – APPEAL AND NEW TRIAL – MISCARRIAGE OF JUSTICE – PARTICULAR CIRCUMSTANCES NOT AMOUNTING TO MISCARRIAGE – MISDIRECTION OR NON-DIRECTION – where the appellant contends that a miscarriage of justice occurred when the trial judge told the jury that the prosecution had to prove that the appellant took money without the authority of “one of the executors”, instead of without the authority “of an executor” – where no request for a further direction – whether, in context of the trial, the direction was sufficient to instruct the jury on the issue of authority

Criminal Code (Qld), s 22, s 590AA

Criminal Code (Cth), s 9.1, s 9.2, s 9.5

Taxation Administration Act 1953 (Cth), s 353-10, s 355-10, s 355-25, s 355-30, s 355-50

Baini v The Queen (2012) 246 CLR 469; [2012] HCA 59, cited

Binetter v Deputy Commissioner of Taxation (2012) 206 FCR 37; [2012] FCAFC126, cited

Cleland v The Queen (1982) 151 CLR 1; [1982] HCA 67, cited

Clough v Leahy (1905) 2 CLR 139; [1904] HCA 38, cited

Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564; [1995] FCA 1715, cited

Electrolux Home Products Pty Ltd v Australian Workers’ Union (2004) 221 CLR 309; [2004] HCA 40, cited

Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477; [1993] HCA 74, cited

Hamilton v Oades (1989) 166 CLR 486; [1989] HCA 21, cited

Hammond v The Commonwealth (1982) 152 CLR 188; [1982] HCA 42, cited

Kirk v Industrial Court (NSW) (2010) 239 CLR 531; [2010] HCA 1, cited

Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39, discussed

Lee v The Queen (2014) 253 CLR 455; [2014] HCA 20, discussed

Lee v The Queen (2013) 232 A Crim R 337; [2013] NSWCCA 68, cited

McDermott v The King (1948) 76 CLR 501; [1948] HCA 23, cited

McGuinness v Attorney-General (Vic) (1940) 63 CLR 73; [1940] HCA 6, cited

McKay v The King (1935) 54 CLR 1; [1935] HCA 70, cited

McMunn v The Queen [2007] VSCA 149, cited

NS v Scott [2017] QCA 237, cited

Piche v The Queen (1970) 11 DLR (3d) 700; [1971] SCR 23, cited

Potter v Minahan (1908) 7 CLR 277; [1908] HCA 63, cited

R v B [2000] 1 Qd R 28; [1998] QCA 423, cited

R v Cowan; Ex parte Attorney-General (Qld) [2016] 1 Qd R 433; [2015] QCA 87, cited

R v Cranston [1988] 1 Qd R 159, cited

R v Dixon (1992) 28 NSWLR 215, cited

R v Doyle; Ex parte Attorney-General [1987] 2 Qd R 732, cited

R v Elfar (2017) 347 ALR 677; [2017] QCA 149, cited

R v Kassulke [2004] QCA 175, cited

R v Leach [2014] QDCPR 1, cited

R v Lee (1950) 82 CLR 133; [1950] HCA 25, discussed

R v McKay [1965] Qd R 240, cited

R v Owen [1951] VLR 393; [1951] VicLawRp 57, cited

R v Pearce (2001) 48 ATR 390; [2001] NSWCCA 447, cited

R v Perrin [2017] QCA 194, cited

R v Seller (2015) 89 NSWLR 155; [2015] NSWCCA 76, discussed

R v Seller & McCarthy (2013) 273 FLR 155; [2013] NSWCCA 42, discussed

R v Su [1997] 1 VR 1, cited

R v Swaffield (1998) 192 CLR 159; [1998] HCA 1, cited

R v Zion [1986] VR 609; [1986] VicRp 58, cited

Russo v Aiello (2003) 215 CLR 643; [2003] HCA 53, discussed

Sorby v The Commonwealth (1983) 152 CLR 281; [1983] HCA 10, cited

Tofilau v The Queen (2007) 231 CLR 396; [2007] HCA 39, cited

Victoria v Australian Building Construction Employees’ & Builders Labourers’ Federation (‘The BLF Case’) (1982) 152 CLR 25; [1982] HCA 31, cited

X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29, discussed

COUNSEL:

B Blond for the appellant

B H P Mumford for the respondent

SOLICITORS:

Stockley Pagano Lawyers for the appellant

Director of Public Prosecutions (Commonwealth) for the respondent

  1. SOFRONOFF P:  In February 2010 the Australian Taxation Office served a notice on the appellant under s 353-10 of Schedule 1 of the Taxation Administration Act 1953 (Cth) requiring him to give evidence on 18 March 2010 on oath or affirmation and to produce documents.
  2. The notice specified that criminal liability might follow a failure to comply with the notice:

“PENALTIES FOR FAILURE TO COMPLY WITH THE NOTICE

TAKE NOTICE THAT A PERSON who, when and as required pursuant or under a taxation law, refuses or fails to:

  • furnish information or
  • produce a book, paper, record or other document or
  • attend (and answer questions), or
  • take an oath or make an affirmation when attending

to the extent that the person is capable of doing so, that person will be guilty of an offence or offences under sections 8C and/or 8D of the Taxation Administration Act 1953.

That person will be liable, under sections 8E or 8ZF of the Taxation Administration Act 1953 to:

  • a fine not exceeding $2,200 for a first offence or
  • a fine not exceeding $4,400 for a second offence, or
  • a fine not exceeding $5,500, and/or imprisonment not exceeding 12 months, or $27,500 for a company, for a third or subsequent offence.”
  1. The propriety of the issue of those notices and the propriety of the ensuing questioning of the appellant was not in dispute.
  2. The questioning commenced with the following statement by one of the examiners:

“Okay.  Now, I just need to advise you that knowingly making a false statement is an offence under section 136.1 of the Criminal Code Act 1995 and they may be prosecuted for doing so.  If you have a belief only about an answer to a question rather than knowing the answer, then you must say so as a part of your answer to the question.  If you do not know the answer to the question, you should state that you don’t know the answer to the question.  And refusal to answer a question constitutes an offence under paragraph 8D(1)(a) of the Taxation Administration Act, and the privilege against self-incrimination is not a defence for failing to answer a question.

Okay.  The purpose of the interview is to ask you questions in regards to the GST and income of your partnership Andrew Brown and Philip Leach, the trust, trustee for R and M No. 88 Trust, and the trustee for the No. 88 Trust.  Okay.  If at any time you have concerns or questions with the audit, you can raise them directly with myself or with Warren, or you can contact our team leader, Russell Baldwin, and I can give you a card with his number on it.

Okay.  Now, just reiterate, we are going to treat you in accordance with our taxpayers charter principles, okay, so we’ll be fair, professional and open, okay, and we’ll use the power only for the purposes of taxation laws, and we’ll respect your right – your legal right – your legal rights, including legal professional privilege.  Okay.

We expect that you’ll provide full and free access to buildings, premises, records and documents, allow us to make copies or take extracts of documents, provide reasonable facilities and assistance, provide complete and accurate responses to requests for information, and be truthful and honest in your dealings with us.  Okay.  So do you have any questions at this stage?

No.”

  1. The appellant answered the questions that were put to him and the interview was recorded and later transcribed.
  2. According to oral evidence given at a pre-trial application in this proceeding, in November 2010 Ms Toni O’Brien, an investigator with the ATO, received a copy of the transcript of the interview.
  3. Section 355-25, to which I will refer in detail later, makes it an offence for a taxation officer to disclose, inter alia, information obtained by means of a compulsory interview.
  4. Ms O’Brien was aware of s 355-50 which allowed for disclosure of protected information by her in the performance of her duties.  That section provides:

35550 Exception—disclosure in performing duties

  1. Section 35525 does not apply if:
  1. the entity is a taxation officer; and
  1. the record or disclosure is made in performing the entity’s duties as a taxation officer.

Note 1: A defendant bears an evidential burden in relation to the matters in this subsection: see subsection 13.3(3) of the Criminal Code.

Note 2: An example of a duty mentioned in paragraph (b) is the duty to make available information under sections 3C and 3E.

  1. Without limiting subsection (1), records or disclosures made in performing duties as a taxation officer include those mentioned in the following table:

Records or disclosures in performing duties

Item

The record is made for or the disclosure is to ...

and the record or disclosure ...

1

any entity, court or tribunal

is for the purpose of administering any taxation law.

2

any entity, court or tribunal

is for the purpose of the making, or proposed or possible making, of an order under the Proceeds of Crime Act 2002 that is related to a taxation law.

3

any entity, court or tribunal

is for the purpose of criminal, civil or administrative proceedings (including merits review or judicial review) that are related to a taxation law.

4

any entity

is for the purpose of responding to a request for a statement of reasons under the Administrative Decisions (Judicial Review) Act 1977 in relation to a decision made under a taxation law.

5

any entity

is for the purpose of:

  1. determining whether to make an ex gratia payment; or
  2. administering such a payment;

in connection with administering a taxation law.

 

any entity

is for the purpose of enabling the entity to understand or comply with its obligations under a taxation law.

7

the Secretary of the Department

  1. is of information that does not include the name, contact details or ABN of any entity; and
  2. is for the purpose of:
    1. the design of a taxation law; or
    2. the amendment of a taxation law.

8

any board or member of a board performing a function or exercising a power under a taxation law

is for the purpose of performing that function or exercising that power.

9

a competent authority referred to in an international agreement (within the meaning of section 23 of the International Tax Agreements Act 1953)

is for the purpose of exchanging information under such an international agreement.

10

any employer (within the meaning of the Superannuation Guarantee (Administration) Act 1992)

is for the purpose of disclosing to that employer information included in a notice given to the Commissioner under subsection 32F(1) or 32H(1A) of that Act by an employee (within the meaning of that Act) of that employer.”

  1. Ms O’Brien was new to the job at this time and so she sought advice from supervisors who told her that disclosure to the DPP was permissible under s 355-50 and “that it was totally appropriate and lawful to release the information to the DPP in the submission of the brief of evidence”.  Ms O’Brien said that she had made the disclosure of the content of the interview to the DPP “as just – it was – formed part of the brief.  It formed part of the actions of the auditor in conjunction with [the appellant].  It was as simple as that.  I made no conscious decision for any release under any particular provision.”
  2. On 26 September 2011 the DPP received from Ms O’Brien what one of the DPP’s officers described as “a referral” from the ATO.  This included the transcript of the compulsory interview.  The prosecutor who received the material read the transcript “as part of the process of reviewing the ATO brief of evidence”.
  3. The DPP presented an indictment on 10 October 2013 charging the appellant with 19 counts of obtaining a financial advantage by deception, three counts of attempting to obtain such an advantage and 21 counts of knowingly using a false document with the intention of dishonesty obtaining a gain.  These were all offences under the Criminal Code (Cth).  The appellant was charged with a further count of fraud under the Criminal Code (Qld).
  4. The transcript of the interview had been disseminated to numerous officers within the office of the DPP.  The two officers who had conducted the interview itself, Ms Belinda McDonald and Mr Warren Heath, also provided witness statements to prosecutors.  Ms O’Brien who had conducted the investigation within the ATO, and who had used the transcript as part of that investigation, had also provided a witness statement for the proceeding.  A document styled “Phillip Denis Leach Elements/Evidence Table”, produced by the DPP as an internal aid, made references to the transcript as part of the proof of the prosecution case.
  5. The appellant filed a pre-trial application pursuant to s 590AA of the Criminal Code (Qld) seeking a permanent stay of the indictment and for a ruling that the content of the interview was inadmissible at the trial.  Alternatively, he sought directions for such orders as might be necessary to ensure that the prosecution was conducted without the advantage of having access to a transcript of the interview.  The application was heard by Shanahan DCJ who dismissed it.
  6. The trial began on 24 April 2017 and ran for 13 days.
  7. Ms McDonald, one of the officers who had interviewed the appellant, was a witness and, during the course of her testimony, she produced a recording and a transcript of the interview.  The prosecutor tendered the recording as an exhibit and the interview was played for the jury.  The transcript was marked for identification.  In the absence of the jury, defence counsel said: 

“Yes, your Honour, I thought I’d just say something for the record.  There have been previous applications in this matter about the interview….  And of course, objection was made and is maintained, but those rulings having been made, I just thought I should stick something on the record for the trial transcript.”

  1. The learned trial judge understood this to be an objection to the admission of the interview as evidence and it was obviously so intended.  I too understand it in that way.
  2. The appellant called no evidence.
  3. The prosecution case relied heavily upon the content of the interview as evidence of the appellant’s “consciousness of guilt”.  On the eighth day of the trial, the learned trial judge invited the prosecutor to identify the lies that the prosecution alleged the defendant had told during the interview and how those lies, if the jury accepted them as lies, could be used as proof of his consciousness of guilt.  The prosecutor identified six lies.  Each was based upon answers that the appellant had given during the interview to explain his acts and to exculpate himself and each became the subject of evidence given by witnesses called by the Crown at the trial for the specific purpose of rebutting those answers.
  4. One example will suffice to demonstrate how the prosecution used the interview:

“MR MUMFORD: The primary lie fastened on by the Crown as told from a consciousness of guilt starts at page 22 of the transcript.

HIS HONOUR: Yes.

MR MUMFORD: Now, it starts at about line 17 or so where Mr Leach is recorded as saying:

I borrowed the money to repay the amounts to the two trusts.

Following on from that page, it nominates a man named De Graff. Further down that same page, he’s identified as a money lender. He lends money – he’s not a bank but he lends money. He borrowed that without documentation. There was no formal agreement or any formal loan documentation at the bottom of that same page other than there’s going to be expensive. Over the page, 23, Mr Leach says that that happened in the last two weeks. He reiterates that that is the primary position, that is, the money’s borrowed from Mr De Graff to repay the trusts so the trusts can repay the Tax Office from about line 25 onwards at page 23. And he then moves to – if we move to page 24, from about line 9 or so, McDonald asks:

How did he get the money to you?

Answer:

He paid it to my trust account.

Just to paraphrase – a direct credit into his trust account in the past two weeks. The Crown says that’s a lie told from a consciousness of guilt because of other evidence.”

  1. The prosecutor also relied heavily on the interview in his closing address.  The learned trial judge made several references to the content of the interview in the course of his summing up.  In the course of explaining that the defendant bore no onus of proof, his Honour said:

“Now, in this case, the Accused gave an interview to officers of the Australian Tax Office.  As you have heard, he was under compulsion in relation to that.  He could not decline to give an interview.  He gave that interview under an affirmation to tell the truth, and he answered all the questions that were asked of him, and he was warned that if he did not give an honest answer, it would be an offence.  I will have more to say about that later, but that interview, although under compulsion, is not his evidence in the trial, but there may be ways in which you can use it.  But having given that interview, he did not take on an onus, in this trial, to prove that he is not guilty, or indeed, to prove anything.  It simply provides further evidence for you, in your assessment of the matter, but by giving that interview under compulsion, he did not take on any onus that he had to prove that he was not guilty of these offences.”

  1. In relation to the 19 charges of obtaining a financial advantage by deception, his Honour explained that, first, the prosecution had to prove that the defendant had obtained a financial advantage.  The financial advantage was the obtaining of GST refunds.  Second, the prosecution had to prove that the obtaining was by deception and that the defendant had intended to deceive the ATO.  In this case, his Honour explained, that involved proof that the defendant knew that the relevant statements in the BAS statements that he had submitted were false.
  2. His Honour directed the jury about the use that could be made of the interview.  Those directions were given to the jury in a context in which his Honour had earlier directed the jury about the significance of circumstantial evidence in this case.  His Honour had said:

“It is the issues of intentional deception and dishonesty that are the subject of circumstantial evidence, as I mentioned earlier.  Prosecution say, from all of the evidence, you would find those elements proved beyond reasonable doubt, in other words, that there was an intentional deception by the defendant and that he was dishonest in that deception or in that – in what he did in relation to those two strands of that test.”

  1. Accordingly, after dealing with the elements of the charges, his Honour turned to the real issue in the case, dishonesty.  In that connection his Honour directed the jury about the use that the jury could make of the transcript:

“I want to speak to you now about the interview that the defendant had with the officers from the Australian Taxation Office.  As has been emphasised to you already, firstly, the defendant was compelled by law to participate and answer the questions.  He had no ability to claim privilege against self incrimination.  He also swore an affirmation in that interview to tell the truth and he was warned that the giving of false answers would be an offence.  This has been described as an audit interview by the Australian Taxation Office and not an interview in the investigation of possible offences.  He thus gave that account under an affirmation.  As I’ve told you, that is not evidence in the trial but it is something beyond a mere voluntary statement out of court because he actually gave that account having sworn to tell the truth.  However, it’s not evidence in the trial and as I told you earlier, by doing that, the defendant doesn’t take upon an onus of proving that he is not guilty in that interview.

The account he gave may convince you of his innocence if you accept it.  It may cause you to have a reasonable doubt about his guilt of the various charges.  You might also reject his explanation totally.  Those are all matters for you.  If you were to reject his explanations, you need to consider all of the other relevant evidence about a particular charge and decide whether the prosecution has proved that charge beyond a reasonable doubt.  It would be only then that you could convict.  If you are not so satisfied, you would acquit.  The interview with the taxation officers contains no admissions of the defendant of any wrongdoing.  However, the prosecution argue that he told a number of lies in that interview, and he told those lies out of a consciousness of guilt.  In other words, he knew that he had committed criminal offences and he told lies to cover them up.  The prosecution also argue that you would reject the explanations he gave, because they make no sense and, in some matters, are contradictory.  However, the prosecution point to a number of statements by the defendant in that interview which, the prosecution argue, are proved to be lies by other evidence.  That is, not simply by a rejection of the defendant’s explanations.  The prosecution argue that he told those lies because he knew telling the truth would implicate him in the commission of the offences, what the law terms, lies told out of a consciousness of guilt.”

  1. His Honour then directed the jury about the lies that the prosecution said had been told by the defendant during the interview.  It will suffice to refer to one of these to give the flavour of the case at its conclusion in relation to each of the six lies relied upon by the prosecution:

“I want to give you some directions, now, about those lies, if you find that they are lies, and how you can use them.  I want to specify to you exactly what these lies are.  The first is, that he told the tax officers that he borrowed just over one million dollars from Mr Warwick De Graff, a money-lender.  That the loan had been paid as a direct credit into his trust account and he used it to refund the GST payments.  The Crown argue that that is proved to be a lie in a number of different ways.

First, the evidence of Mr DeGraff, that he did not give such authorisation or make such a loan.  So that would depend on your assessment of Mr De Graff and whether you accept his evidence.”

  1. In the same way, each one of the appellant’s statements made during the interview which the prosecution alleged were lies had been contradicted by witnesses who had been called for that purpose.
  2. The jury convicted the appellant on the counts to which I have referred.
  3. The prosecution based its case about the essential element of the appellant’s state of mind upon proof of what the prosecution submitted were lies told in response to questions to which the appellant had been required to give an answer, by express threat of prosecution if he refused to do so, and in respect of which he was unable to claim any privilege against self-incrimination.  The question in this appeal is whether such a course was open to the Commonwealth in prosecuting an indictable offence before a jury.
  4. Section 353-10 of the Taxation Administration Act 1953 (Cth) confers power upon the Commissioner of Taxation to compel a person to give evidence on oath.  Relevantly, that provision states:

353-10 Commissioner’s power

  1. The Commissioner may by notice in writing require you to do all or any of the following:

  1. to attend and give evidence before the Commissioner, or an individual authorised by the Commissioner, for the purpose of the administration or operation of a taxation law;

  1. The Commissioner may require the information or evidence:
    1. to be given on oath or affirmation; and
    2. to be given orally or in writing.

For that purpose, the Commissioner or the officer may administer an oath or affirmation.

…”

  1. Subdivision 355-25 of the Taxation Administration Act makes it an offence for taxation officers to disclose information obtained in the course of the performance of their duties.  Section 355-25 provides, relevantly:

“(1) An entity commits an offence if:

  1. the entity is or was a taxation officer; and
  2. the entity:
    1. makes a record of information; or
    2. discloses information to another entity (other than the entity to whom the information relates or an entity covered by subsection (2)) or to a court or tribunal; and
  3. the information is protected information; and
  4. the information was acquired by the first-mentioned entity as a taxation officer.”
  1. The maximum penalty for a contravention of s 355-25 is imprisonment for two years.
  2. Section 355-30 defines “protected information” to mean information that “was disclosed or obtained under or for the purposes of a law that was a taxation law […] when the information was disclosed or obtained”.  The information must relate to the affairs of an entity and must identify, or be reasonably capable of being used to identify, the entity.  The same provision defines “taxation officer” to mean, relevantly, an individual appointed or engaged under the Public Service Act 1999 (Cth) and performing duties in the Australian Taxation Office.  Information obtained by a taxation officer by means of a compulsory examination conducted under s 353-10 falls within the definition of “protected information”.
  3. Section 355-50 provides that the section does not apply, that is to say, no offence will have been committed, by a taxation officer’s disclosure in the performance of the officer’s duties.  Without limiting the generality of that exception, specific instances are said to fall within the expression “disclosures made in performing duties as a taxation officer”.  These include the following:

“a disclosure to “any entity, court or tribunal” for the purposes of “criminal proceedings that are related to a taxation law”.”

  1. A number of general observations may be made about these provisions.
  2. First, the objects of these provisions are relevant to their interpretation.  As Gleeson CJ said in Russo v Aiello,[1] the insertion of a statement into an Act about its objects:

“… is not an exercise in apologetics. Rather, it gives practical content to terms such as ‘‘reasonable’’, ‘‘justification’’ and ‘‘satisfactory’’. What would constitute justifiable delay on the part of a reasonable person in making a claim is to be considered in the light of the legislative purposes explained in the Act.”

  1. Division 355 was inserted into the Act by the Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010.  Section 355-10 stated the objects of the new division as follows:

“The objects of this Division are:

  1. to protect the confidentiality of taxpayers’ affairs by imposing strict obligations on taxation officers (and others who acquire protected tax information), and so encourage taxpayers to provide correct information to the Commissioner; and
  1. to facilitate efficient and effective government administration and law enforcement by allowing disclosures of protected tax information for specific, appropriate purposes.”
  1. Second, the objects do not expressly include the alteration of the fundamental principles according to which the system of criminal justice is administered.  Rather, these provisions define the scope of criminal responsibility for the act of disclosure of protected information by taxation officers.  Section 35525 creates an offence and s 35550, in terms of s 13.4 of the Criminal Code (Cth), provides for an exception “provided by the law creating the offence”.  A person charged with an offence against s 35525 would need to discharge the “evidential burden” referred to in s 13.4 of the Code before the exception afforded by s 35550 would have to be negatived by the prosecution as part of its case.  If, in the course of a prosecution, an issue has been raised by the evidence that required consideration of whether s 35550 had been engaged, it would be necessary for the prosecution to establish that, for example, the disclosure had not been made for a relevant purpose.  Section 35550 simply specifies a series of facts which, if not negatived by the prosecution once the issue arises, will result in an acquittal because the prosecution will have failed to prove its case.
  2. Section 35550 assumes that there is a duty of disclosure that may be performed in the prescribed circumstances.  Significantly for this appeal, these provisions say nothing at all about the propriety of the use of protected information by its recipient.
  3. Third, there is no express provision in any legislation which expressly authorises the disclosure to prosecutors of answers of an examinee given to questions administered under s 35310 in order to help them formulate and then to prove criminal charges against that examinee.  Nor is there any express provision in any legislation which makes the questions and answers from a s 35310 examination admissible as evidence at a trial to prove the criminal guilt of that examinee.
  4. These considerations give rise to the issue of statutory interpretation raised by this appeal.  The question is whether the legislation implicitly authorises the disclosure to and use by the DPP of the content of a s 35310 examination for the purpose of a consideration of charges against the examinee, for the purpose of the formulation of such charges, for use in the preparation of the prosecution case in relation to such charges and as evidence at a criminal trial to prove the guilt of the examinee.
  5. X7 v Australian Crime Commission[2] was concerned with the Australian Crime Commission Act 2002 (Cth).  That Act provided for the compulsory questioning of persons for the purposes of operations and investigations conducted by the Commission.  Such questioning had to be conducted in private.  The provision of false information at an examination was an offence.  A refusal to answer questions or to provide information was an offence.  That an answer might tend to incriminate an examinee was not an excuse to refuse to answer a question.  However, upon a claim for privilege being asserted, the answer would then be inadmissible in evidence against that person in a criminal proceeding or in a proceeding for the imposition of a penalty.  Section 25(9) empowered an examiner to make a direction limiting the publication of evidence given at the examination, and required such direction to be given, if “the failure to do so might prejudice … the fair trial of a person”.
  6. The plaintiff had been charged with certain offences.  He was then required to attend an examination under the Act.  The plaintiff was asked questions about the charges that had been laid.
  7. Like the present appeal, X7 concerned the use that could be made by the executive of a power of compulsory questioning under a law that abrogated the examinee’s privilege against self-incrimination.  Two features distinguish X7 from this case.  First, in X7 the Act expressly made the answers inadmissible at a criminal trial of charges against the examinee once privilege against self-incrimination had been asserted.  The Act being considered in this appeal does not do so expressly.  Second, in X7 the examinee had been charged at the time the examination was held.  In this case no charges had been laid when the appellant was examined.
  8. Despite those differences, X7 establishes principles that are applicable here.  Hayne and Bell JJ said:

[124] Even if the answers given at a compulsory examination are kept secret, and therefore cannot be used directly or indirectly by those responsible for investigating and prosecuting the matters charged, the requirement to give answers, after being charged, would fundamentally alter the accusatorial judicial process that begins with the laying of a charge and culminates in the accusatorial (and adversarial) trial in the courtroom.  No longer could the accused person decide the course which he or she should adopt at trial, in answer to the charge, according only to the strength of the prosecution's case as revealed by the material provided by the prosecution before trial, or to the strength of the evidence led by the prosecution at the trial.  The accused person would have to decide the course to be followed in light of that material and in light of any selfincriminatory answers which he or she had been compelled to give at an examination conducted after the charge was laid.  That is, the accused person would have to decide what plea to enter, what evidence to challenge and what evidence to give or lead at trial according to what answers he or she had given at the examination.  The accused person is thus prejudiced in his or her defence of the charge that has been laid by being required to answer questions about the subject matter of the pending charge.

[125] As has been explained, if an alteration of that kind is to be made to the criminal justice system by statute, it must be made clearly by express words or by necessary intendment.  If the relevant statute does not provide clearly for an alteration of that kind, compelling answers to questions about the subject matter of the pending charge would be a contempt.”

  1. An Act may, of course, necessarily imply that a fundamental common law principle has been abrogated.  The abrogation of the right to silence by s 35310 of the Taxation Administration Act 1953 is an example of this.[3]  Hayne and Bell JJ held that the Act did not implicitly change the criminal process:

“The performance of that investigative function is in no way restricted or impeded if the power of compulsory examination does not extend to examination of a person who has been charged with, but not yet tried for, an indictable Commonwealth offence about the subject matter of the pending charge.  The general provisions made for compulsory examination, when read in their context, do not imply, let alone necessarily imply, any qualification to the fundamentally accusatorial process of criminal justice which is engaged with respect to indictable Commonwealth offences.”[4]

  1. Kiefel J, as her Honour then was, agreed substantially with the reasons of Hayne and Bell JJ and said that it was a “fundamental principle of the common law”[5] that the onus of proof rests on the prosecution and said that it was a “companion principle” that the prosecution cannot compel an accused to assist it.[6]
  2. Her Honour then said:

“Can it be said, by reference to the terms of the ACC Act, its purposes and its operation, that the legislature has directed its attention to an examination of a person as to offences with which that person is presently charged and whose trial is pending?  Has it directed its attention to the effect of an examination in such circumstances on the fundamental principle which informs the criminal justice system, and to whether the examination may pose a real risk of interference with the administration of criminal justice?  The answer to each must be “no” for the reasons given by Hayne and Bell JJ.”[7]

  1. After X7 had been argued but before it was decided, the New South Wales Court of Criminal Appeal heard and decided R v Seller & McCarthy.[8]  Like the appellant in X7, the appellants in Seller had each been questioned under s 30 of the Australian Crime Commission Act 2002 (Cth).  But unlike X7, the appellants had not yet been charged at the time they were both questioned.  An officer of the ATO, Mr Tang, had been seconded to the Commission and he attended the examinations.  His function was to assist the Commission in the task of financial analysis in its investigation of the appellants.  After the examinations had been concluded, he returned to the ATO.  He then read material parts of the transcripts of the appellants’ evidence so that he could use their evidence when, as intended, he gave evidence against them.
  2. The appellants were then both charged with offences arising out of the Commission’s examination and its other investigation of them.  They had both claimed privilege and so the content of their examinations could not be tendered at any criminal trial.  The examiner had also made directions prohibiting publication of the evidence given by the appellants.  There was an issue in the appeal about the effect of those directions and of variations to them but nothing turns upon that issue for the present.  Their evidence was given to the Director of Public Prosecutions and was read by certain officers of the DPP.  In particular, Mr Tang used it to prepare his own evidence which would prove objective facts “against which the truth and accuracy of the statements made by the applicants will be tested”.  He “was materially assisted in the preparation of his statements of evidence”[9] by his use of the transcripts.
  3. The appellants sought a permanent stay and the trial judge considered that a stay ought to be granted if there was an interference with the administration of justice in a practical, rather than a theoretical, manner.[10]  The trial judge concluded that, there having been indirect and derivative use of the material by the DPP and there having been assistance to one of the proposed witnesses (Mr Tang) by his use of the material, a permanent stay of proceedings ought be granted.[11]
  4. The DPP appealed and was successful but not on all of the grounds advanced.  The DPP had submitted that because the statute did not afford immunity against the derivative use of the evidence there could never be an occasion to stay a proceeding on the ground that the fair trial of the charges had been prejudiced merely because the DPP had had access to the materials.  This submission was rejected.
  5. Bathurst CJ, who wrote the leading judgment with which McLellan CJ at CL and Rothman J, agreed, citing the following passage from the reasons of Gibbs CJ in Sorby v The Commonwealth:[12]

“In the absence of binding authority the matter must be approached from the standpoint of principle.  If a witness is compelled to answer questions which may show that he has committed a crime with which he may be charged, his answers may place him in real and appreciable danger of conviction, notwithstanding that the answers themselves may not be given in evidence.  The traditional objection that exists to allowing the executive to compel a man to convict himself out of his own mouth applies even when the words of the witness may not be used as an admission.  It is a cardinal principle of our system of justice that the Crown must prove the guilt of an accused person, and the protection which that principle affords to the liberty of the individual will be weakened if power exists to compel a suspected person to confess his guilt.  Moreover the existence of such a power tends to lead to abuse and to “the concomitant moral deterioration in methods of obtaining evidence and in the general administration of justice”.”

  1. Bathurst CJ observed that, before being amended, the Act had contained an immunity against the direct use and derivative use of such evidence.  His Honour held that the repeal of the indirect use privilege by the amendment did not impinge upon the scope of the protection contained in s 25A.  His Honour held that the trial judge had been right in his conclusion that dissemination to the DPP might prejudice a fair trial.  In relation to one of the appellants this was because the examination touched upon factual matters the proof of which were necessary to sustain the charge and covered his view and understanding of the nature and structure of the arrangements, the roles and functions of relevant entities and whether the ventures were accompanied by features of dishonesty.  In relation to the other appellant, this was because the examination had dealt with factual matters which were central to the charge and to his defence to that charge.  In the case of each of them, the examination had engaged the privilege against self-incrimination but required the appellants to answer questions which, ordinarily, they would be entitled to refuse to answer.[13]  It followed that the disclosures ought not have been made.
  2. That conclusion did not depend upon s 25A.  That section conferred a power and in some circumstances imposed an obligation upon an examiner to make directions to prevent prejudice to a fair trial.  It did not otherwise say anything about the propriety of disclosure or use of material obtained under compulsion.  Nor did it affect the existence of other means by which improper use might be prevented, including by a stay, prohibition, injunction, or by refusing to admit evidence.
  3. The DPP succeeded in the appeal because it was held that, as a practical matter, there was no actual risk, in the events which had happened, that the trial would be unfair.  This was because the lawyers latterly engaged in the prosecution of the charges had neither seen nor been influenced by any of the evidence.  There was no reason to think, therefore, that the trial might be affected by any relevant knowledge – with one exception.  Mr Tang’s position had been affected by his access to the evidence.  However, “at most it would lead to an exclusion of his evidence” which was a matter for the trial judge to consider in due course.[14]
  4. For these reasons a permanent stay was not justified.
  5. Bathurst CJ then concluded:

[117] I should add that it would not be appropriate for the CDPP to make any use of the transcripts in the future conduct of this case.  If I were of the opinion that there was a threat that this would occur, I would have made the setting aside of the stay subject to an undertaking by the Director that no further use would be made of them.”

  1. Three points emerge from this case.
  2. First, evidence obtained by means of a statutory power to compel the giving of answers, under a statute that abrogates the privilege against self-incrimination, from a person who has not been charged, and which is evidence that, upon the person’s being charged, would disclose defences or explanations of transactions by the accused which he or she may raise at a trial, and possibly evidence or information that would tend to show that documents or transactions, apparently regular on their face, in fact tend to support the charges, ought not be disclosed to a prosecutor and cannot be used by a prosecutor against the examinee.
  3. Second, the reason why such material ought not be disclosed is that its use would contravene what Hayne, Bell and Kiefel JJ were later to identify in X7 as the “fundamental principle”.[15]
  4. Third, while in X7 and in Seller the Act expressly prohibited the use of the material as evidence, it was the common law which prohibited use of the material at all by the prosecutor.
  5. In Lee v New South Wales Crime Commission[16] the appellants had been charged with various criminal offences.  They were summoned for examination pursuant to the Criminal Assets Recovery Act 1990 (NSW).  The question was whether s 31D of that Act authorised the questioning of a person who had been charged concerning the subject matter of those charges.  It is not necessary to examine the decision, by majority,[17] that the Act did authorise such questioning.  It is an instance of a statute which, because of its particular terms and objects, necessarily implied that the power extended to questioning persons who had been charged about those charges.[18]
  6. These same appellants, Messrs Lee, father and son, reappeared in Lee v The Queen.[19]  The New South Wales Crime Commission had also subjected them to compulsory examinations at a time before they had been charged pursuant to s 16(1) of the New South Wales Crime Commission Act 1985Section 18B(1) of that Act contained provisions that were relevantly the same as the provisions in the Australian Crime Commission Act that had been considered in X7 and Seller.  After they had been questioned, the appellants were each charged with various counts of supplying a prohibited drug.  The Commission published the transcripts of evidence to police and to the DPP to aid in their prosecution.  Documents that one of the appellants had produced were also made available to potential witnesses, to the police and to the DPP.  The solicitor at the DPP who was preparing the matter obtained the transcripts to see whether “it is something that defence are going to try & rely on – specifically that they had no knowledge that the washing powder was actually drugs”.[20]  The prosecutor at the trial acknowledged that, although he knew that the evidence was inadmissible (because of an express provision of the Act), “I suppose it gives us a bit of an idea where they might be heading”.[21]  The prosecutor said that the information might be used to rebut any innocent explanation.[22]
  7. The High Court, by a unanimous decision,[23] held that “the trial miscarried in a fundamental respect”.[24]  It was held that s 13(9), which obliged an examiner to direct that the evidence not be published if publication might prejudice a fair trial, “supported the maintenance of the system of criminal justice referred to in X7 and the trial for which that system provides, in which the prosecution has a defined role and the accused does not”.[25]  The failure to make the required direction had the result “that the appellants’ trial differed in a fundamental respect from that which our criminal justice system seeks to provide”.[26]
  8. Although the presence in the Act of s 13(9) meant that emphasis was placed in the Court’s reasons upon the Commission’s failure to act under that provision, I do not read those reasons as stipulating that, absent a provision like s 13(9), the disclosure of the material to the DPP and the use of that material by the prosecutor would be proper.  This appears, at least, from the following passage:

“The decision to [disclose the material to the DPP] without regard to the protective purpose of s 13(9), was not authorised by the NSWCC Act.  The publication to the DPP, in particular, was for a patently improper purpose, namely the ascertainment of the appellants’ defences.  However, the critical question on these appeals is not whether the publication was unlawful and wrongful.  It is whether, as a result of the prosecution being armed with the appellant’s evidence, there has been a miscarriage of justice in the eyes of the law.”[27]

  1. In the New South Wales Court of Criminal Appeal, consistently with the state of the authorities until then, this aspect of the case had turned upon the question of whether the publication of the evidence to the DPP had given rise to any “practical unfairness”.[28]  Basten JA, with whom Hall and Beech-Jones JJ agreed, referred to Baini v The Queen[29] as authority for the proposition that to show there has been a miscarriage of justice in this context requires an appellant to demonstrate that there is a causal connection between the irregularity and conviction so that, but for the irregularity, the result might have been different.  The Court found that the disclosures had not given rise to any such practical unfairness.
  2. The Court of Appeal had decided Lee on 3 April 2013 without the benefit of the High Court’s decision in X7 which was delivered two and a half months later, on 26 June 2013.  The High Court’s own decision in Lee was delivered on 21 May 2014 and, by reference to its previous decision in X7, proceeded upon an entirely different premise from that which underlay the pre-X7 decision of the Court of Appeal.  The Court said:

[43] These appeals do not fall to be decided by reference to whether there can be shown to be some “practical unfairness” in the conduct of the appellants’ defence affecting the result of the trial.  This is a case concerning the very nature of a criminal trial and its requirements in our system of criminal justice.  The appellants’ trial was altered in a fundamental respect by the prosecution having the appellants’ evidence before the Commission in its possession.”[30]

[46] In X7, it was held that the compulsory examination of a person with respect to an offence with which the person stands charged would be a departure, in a fundamental respect, from that principle (41).  X7 was ultimately concerned with questions of statutory construction.  Nevertheless, the point it makes about what may amount to a fundamental departure from a criminal trial as it is comprehended by our system of criminal justice is relevant to this case.  It is a breach of the principle of the common law, and a departure in a fundamental respect from a criminal trial which the system of criminal justice requires an accused person to have, for the prosecution to be armed with the evidence of an accused person obtained under compulsion concerning matters the subject of the charges.  It cannot be said that the appellants had a trial for which our system of criminal justice provides and which s 13(9) of the NSWCC Act sought to protect.  Rather, their trial was one where the balance of power shifted to the prosecution.”

(Emphasis added)

  1. These conclusions also did not depend upon the presence in the Act of s 13(9).  This appears from the final three sentences of the reasons for judgment:

“What occurred in this case affected this criminal trial in a fundamental respect, because it altered the position of the prosecution vis-a-vis the accused.  There was no legislative authority for that alteration.  Indeed, it occurred contrary to the evident purpose of s 13(9) of the NSWCC Act, directed to protecting the fair trial of examined persons.”[31]

(Emphasis added)

  1. As appears from these passages, the crucial factor in the case was that the provision to the prosecutor of an accused’s evidence, obtained under compulsion and without the protection of any privilege against self-incrimination, was a departure in a fundamental respect from the requirements of a fair trial.  The significance of this deviation was a fortiori because of the effect of s 13(9) but its effect did not depend upon the existence of that provision.
  2. These authorities leave open the question, and I doubt, whether an Australian legislature could validly pass a law to alter the criminal process so as to compel a person to give self-incriminatory evidence for the executive to use in order to formulate a criminal charge against that person and then as evidence to secure that person’s conviction.
  3. But what the cases do make clear is that legislative authority for such a course of action requires the plainest manifestation in an Act.
  4. There is also appellate authority to the same effect about similar provisions in taxation legislation.  The predecessor to s 353-10, s 264 of the Income Tax Assessment Act 1936, was considered by the Full Court of the Federal Court in Deputy Commissioner of Taxation v De Vonk.[32]
  5. De Vonk had been charged with three indictable offences involving fraud against the Commonwealth.  Shortly after he was charged, the Commissioner served De Vonk with a notice issued under s 264 of the Act requiring him to attend and give evidence.  He sought judicial review of the decision to issue the notice on three grounds.  The first ground was that the notice had been issued for an improper purpose.  This ground was rejected on the facts.  The second ground was that his common law privilege had not been abrogated by the Act.  Foster J held that the privilege had been abrogated, as did Hill and Lindgren JJ in a separate judgment.  As authority for this proposition, the decision has since been followed and approved by the Full Federal Court in Binetter v Deputy Commissioner of Taxation[33] and its correctness has not been challenged in this case.
  6. The third ground was that to permit the Commissioner to ask questions about the subject matter of the charges might constitute an interference with the administration of justice and amount to contempt.  The Full Court upheld this ground.
  7. Foster J held that the implicit abrogation of the privilege against self-incrimination did not mean that the statute had thereby also affected the principles relating to whether such questioning might constitute a contempt of court.[34]  Foreshadowing X7 and Lee, his Honour held that De Vonk was entitled to rely upon the doctrine of contempt of court even though he could not claim privilege.[35]
  8. Hill and Lindgren JJ observed that the considerations that suggested that self-incrimination privilege had been abrogated did not apply with equal force when the issue was whether the use of evidence obtained might interfere with the administration of justice.  In particular, their Honours said that the purpose of the section, which was to ensure a proper disclosure of income, would not be frustrated if the power were curtailed in circumstances where litigation had commenced and the exercise of the power might interfere with the administration of justice.[36]  They held that the requirement in the Act that an examinee must answer questions “to the extent to which the person is capable of doing so”, when considered with the purpose of the Act, implicitly abrogated the privilege, but it did not also implicitly abrogate the doctrine of contempt.  The decision to answer or not to answer lay within an examinee’s own power while contempt was a matter for the court itself.[37]  Their Honours held that the power did not extend to a power to interrogate an examinee if that might constitute an interference with the administration of justice.  Consistently with the later authorities, they held that the proposed questioning in that case might have that tendency.  The trial judge had held that in such circumstances the decision to ask questions pursuant to s 264 was unauthorised by the statute.  However, the Full Court held that such a conclusion was hypothetical because, until the questions were known, as well as their context, it could not be determined whether or not such questioning would interfere with the course of justice.  The Commissioner had refused to reveal to the Court his proposed questions but admitted that they would concern the subject matter of the charges.  The appeal was allowed to the extent that the declaration of invalidity of the decision to question the appellant was set aside but an order was made giving liberty to apply to a judge of the Court if an interrogation were commenced and if objection was taken to specific questions.  The Commissioner had already informed the Court that, if the Court should come to that view, he would not seek to examine the respondent during the currency of the criminal proceedings.[38]
  9. De Vonk is consistent with the decision in X7 with the difference that in X7 the majority concluded that the interference with the criminal process was actual and was not hypothetical until a particular question with a deleterious tendency had been asked.
  10. De Vonk is apposite to the present appeal.  It established that the terms of the then legislation did not implicitly authorise an interference with the criminal process by way of permitting the use in criminal proceedings of material obtained by compulsory questioning.  Such use would constitute an interference with the administration of justice.
  11. In X7 and in De Vonk the interference arose because the executive sought to question the accused after he had been charged.  In Seller and Lee (2014) the interference occurred because, having not improperly questioned the accused before they were charged, the executive then sought improperly to make use of the evidence to prosecute them.  The present case goes one step further.  Having properly obtained information by compulsion at a time before charges were laid, the respondent then improperly used that material to assist in the prosecution of the appellant, including by tendering it as part of the Crown case.
  12. Counsel for the appellant at the pre-trial hearing relied upon X7[39], Seller[40] and De Vonk.[41]  He submitted that s 355-50 did not confer authority to disclose the material to the DPP; it merely rendered such disclosure not an offence if, otherwise, a taxation officer’s duty authorised the disclosure.  In addition, it was submitted that the section did not operate to abrogate the fundamental common law principle referred to in X7.  It was also submitted that, if such a disclosure were to be permitted, it would have to be a disclosure made under s 355-70, which refers specifically to disclosures to the Commonwealth Director of Public Prosecution.  It is not necessary to consider this last argument.
  13. The respondent submitted to Shanahan DCJ that the privilege against self-incrimination had been abrogated and that, as a consequence, the material could be disclosed to the DPP and was admissible as evidence.  He submitted that Seller[42] was distinguishable because the disclosure in that case was unlawful but that in this case the disclosure was “expressly authorised by statute”.
  14. The High Court’s decision in Lee (2014)[43] was handed down on 21 May 2014, which happened to be the second day of the hearing of the application.  Shanahan DCJ became aware of that decision and gave copies of it to the parties.  The appellant relied upon it as supporting his application.
  15. Shanahan DCJ gave his ruling on 24 July 2014, refusing the application.  He accepted the respondent’s submission that he should look at the Explanatory Memorandum to the Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010, which introduced s 355 into the Act.  His Honour referred to clauses 5.12 and 5.20 of that Explanatory Memorandum which said:

Disclosures in the performance of a taxation officer’s duties

5.12  Disclosure of taxpayer information by a taxation officer is permitted where the disclosure is made in the course of the taxation officer’s duties.  Generally, such disclosures facilitate the officer carrying out their responsibilities.  For the avoidance of doubt, the new framework provides a non-exhaustive list of disclosures that fall within the scope of such a disclosure.  These are further described below.  [Schedule 1, item 1, section 355-50].

Judicial and administrative proceedings related to a taxation law

5.20  It is not an offence for a taxation officer to disclose taxpayer information for the purposes of proceedings related to a taxation law.  Disclosures to Courts, external legal advisers and to the Commonwealth Director of Public Prosecutions in relation to proceedings that are directly or indirectly related to a taxation law are therefore allowed.  [Schedule 1, item 1, subsection 355-50(2), item 3 in the table]

Example 5.2

An individual knowingly lodges an incorrect tax return.  The ATO decides to prosecute the individual under an offence provision in the Taxation Administration Act 1953 (TAA 1953) and commences an action in the Supreme Court of New South Wales.  The disclosure of taxpayer information in the course of these proceedings is not an offence as it is for the purpose of criminal proceedings related to a taxation law.

Example 5.3

Instead of prosecuting the individual for an offence under the TAA 1953, the ATO decides to refer the matter to the CDPP for prosecution under a provision in the Criminal Code Act 1995.  It is not an offence for the ATO to disclose information to the CDPP, even though the offence provision is not in a taxation law, because the proceedings relate to a taxation law.

Example 5.4

In a case between the Commissioner and Mr Doe, Mr Doe’s legal team undertake a process of discovery to obtain information about Mr Doe from the ATO.  It is not an offence for a taxation officer to disclose information to Mr Doe’s legal team if the proceedings are related to a taxation law.”

  1. His Honour concluded:

[43] As noted above, the legislation must be explicit if it has the impact of interfering with the traditional rights of an accused.  I am of the view that the provisions of Division 355, as relevant in this case, are explicit as to such an impact.  Each of the exception provisions is detailed as to the specific person or organisation to whom disclosure is allowed and for the specified purposes for which the disclosure can be made.  There are various safeguards also contained within the provisions as to the level of authorisation required.”

  1. His Honour held that Division 355 created a detailed scheme where disclosure is justified if the public benefit outweighs privacy considerations.

[54] … The scheme applies to information obtained under compulsory powers contained in s 353-10 Schedule 1, TAA.  That is an explicit legislative scheme that abrogates an individual’s right to incriminate himself or herself.  It is also an explicit scheme permitting the use of material so obtained on the trial of an individual providing the use does not amount to an abuse of process.  The interview conducted pursuant to s 353-10 was conducted for a proper purpose.  The release of the information by the ATO was permitted by s 355-50 to the Commonwealth DPP for the purpose of criminal proceedings that are related to a taxation law.  Such release was explicitly provided by the legislature in the scheme of Division 355.  Although the fairness of the applicant’s trial may be impacted on by the use of this compulsory obtained material, that was explicitly authorised by the legislature.  In the circumstances, where the compulsory interview and the release of the material to the DPP occurred before any charges were laid there was no abuse of process.”

  1. I can discern nothing in the legislation which could implicitly authorise the use of such material in this way.  It must not be forgotten that what is required in this case is a manifestation in the text of the statute of an intention to create a unique regime for tax related prosecutions.  According to such a regime the Commissioner of Taxation could interrogate a taxpayer, who has no right to refuse to answer questions on the ground that the answers might tend to incriminate and, indeed, would be under express threat of prosecution for any refusal to answer or for giving any false answers; and he could then deliver the evidence extracted in that way to the DPP so that the information could be used to consider whether to prosecute the examinee, to formulate charges, to anticipate defences and ultimately to use as evidence to incriminate the accused person.[44]
  2. In Potter v Minahan,[45] O’Connor J said, in a passage quoted with approval by Hayne and Bell JJ in X7:[46]

“It is in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness; and to give any such effect to general words, simply because they have that meaning in their widest, or usual, or natural sense, would be to give them a meaning in which they were not really used.”

  1. As Gleeson CJ said in Electrolux Home Products Pty Ltd v Australian Workers’ Union:[47]

“In R v Home Secretary; Ex parte Pierson, Lord Steyn described the presumption as an aspect of the principle of legality which governs the relations between Parliament, the executive and the courts.  The presumption is not merely a common sense guide to what a Parliament in a liberal democracy is likely to have intended; it is a working hypothesis, the existence of which is known to both Parliament and the courts, upon which statutory language will be interpreted.  The hypothesis is an aspect of the rule of law.”              (citations omitted)

  1. The abrogation, by implication, of the privilege against self-incrimination does not answer the question whether such evidence can then be used when its use would interfere with the administration of justice.  The respondent’s submission to the contrary, made on this appeal, is in conflict with De Vonk.
  2. Unlike the considerations involved in considering the abrogation of self-incrimination privilege, it cannot be said, either from any textual indications or from any impingement upon the utility of the statutory power, that authority to use the evidence in the way in which it was used in this case was necessarily implied by the terms of the statute.  The respondent did not submit that the purposes of the Act would be frustrated to any degree if evidence could not be disclosed or used in the way it was disclosed and used in this case.  Information obtained from people under compulsion may be used in many ways in pursuit of statutory objects even if an examinee remains immune from its use in criminal proceedings.  Information obtained by compulsory interrogation may be used in order to recover unpaid tax by demand and by civil process even if the defendant is the examinee.  Interrogation may dig into the commission of serious offences by an examinee alone or in conjunction with others.  Such information may be disclosed to aid the DPP’s prosecution of offenders other than the examinee.
  3. It must also be remembered that the information that is dealt with by Division 355 is not limited to that which can be obtained under s 353-10.  The definition of “protected information” in s 355-30 is very wide.  Section 355-50 has much work to do even if the information in this case could not be disclosed.  The BAS statements in this case, for example, constitute protected information that might be disclosed for the purpose of criminal proceedings against the appellant.
  4. The legislation does not render it necessary, if the statute is to be effective in reaching its objects, for the evidence of an examinee to be made available to future prosecutors of the examinee nor that such prosecutions would be frustrated or even hampered by a denial of access to the information.
  5. The respondent referred the Court to only a single case in which material obtained under compulsion was used as evidence.  That case was McMunn v The Queen.[48]  The applicant had been convicted of tax related offences.  He had been questioned under compulsion.  The record of his compulsory interview was then tendered at his trial.  His trial counsel had submitted that the record should not be admitted because it had been obtained for an improper purpose.  The trial judge found as a fact that the purpose had not been improper.  It was also submitted at trial that there had been a failure to give the usual warning that the applicant’s answers might be tendered as evidence and that, as a result, the record should have been excluded on the grounds of unfairness.  The trial judge held that, given that self-incrimination privilege did not apply and that the applicant was compelled to answer the questions, such a warning would have been pointless.  These arguments were repeated at the hearing for leave to appeal and were rejected again.  The issues now raised in this appeal were not agitated by the applicant in McMunn, who represented himself at the hearing of his appeal, and so the decision is of no assistance here.
  6. The respondent also relied upon R v Pearce[49] to support that submission and submitted that that case involved “a similar factual situation”.  That case is of no assistance here.  It concerned an issue of whether a statement made by an accused to taxation officers ought not have been admitted in evidence because, as the appellant submitted, the officers regarded him as a suspect but did not give him the necessary caution.  The interview was not a compulsory interview and so the case is not on point.
  7. The respondent also relied upon R v Zion,[50] a decision about the admissibility of answers given in a public examination under s 69 of the Bankruptcy Act 1966 (Cth).  It is irrelevant.
  8. Nor does the Explanatory Memorandum support the conclusion that the fundamental principle has been entrenched upon.  The examples, like s 355-50 itself, also use general language.  Their use to illuminate s 355-50 is not helped by the use of the expression “taxpayer information” as an apparent synonym for “protected information”.  The examples hold good even if they were read so as to exclude information relevant to criminal charges obtained by compulsion from an examinee.  In my respectful opinion, Shanahan DCJ erred in thinking that the Explanatory Memorandum tended to demonstrate that the fundamental principle had been abrogated.
  9. The principles discussed in X7 and in Lee (2014) are not novel.  They were referred to in the High Court as early as in 1905.[51]  They have been considered in the High Court in numerous cases since then.[52]  What the High Court did in the recent decisions to which I have referred is to articulate the principles comprehensively and to describe, in particular, how they operate in the context of legislation that authorises, in general words, the compulsory interrogation of a person, without the benefit of the privilege against self-incrimination, about crimes that person may have committed.  The recent cases demonstrate that statutes authorising such interrogations, and that do so by using general words capable being read so as to abrogate the operation of the principle, will not be read as having that effect unless the purposes of the legislation in question would otherwise be defeated.[53]
  10. Consistently with the decisions of the High Court in X7 and Lee (2014), the decision of the New South Wales Court of Criminal Appeal in Seller and the decision of the Full Court of the Federal Court in De Vonk, the disclosure to the DPP of the evidence given under compulsion in this case, and its subsequent use by the DPP to prepare for the appellant’s prosecution and its admission as evidence at the appellant’s trial, conflicted with the  “fundamental principle of the common law”[54]that the onus of proof rests on the prosecution and conflicts with its “companion principle” that the prosecution cannot compel an accused to assist it.[55]
  11. In each of X7 and De Vonk the appellants had already been charged when it was sought to question them.  In each case it was held that questioning about the subject matter of existing charges was not authorised by the legislation.  In Seller and Lee the appellants were questioned before they had been charged.  The material so obtained was not to be available to the prosecution when charges were later laid.
  12. These consequences followed because the prosecution of criminal charges faithfully in accordance with the fundamental principle identified by the High Court in X7 leaves the accused with no role to play in his or her own prosecution.  A fairly conducted criminal prosecution leaves the accused freedom to make certain choices, a freedom that is guaranteed only if the principle is adhered to.[56]  In Queensland, s 8(1) of the Evidence Act 1977 renders an accused person not compellable to give evidence[57] and so one of these choices is whether an accused will remain silent and merely put the prosecution to proof of its case or whether instead the accused will call evidence or even give evidence to contradict the prosecution case.[58]  Each of these choices has important effects upon how a trial will proceed, including upon the cross-examination by defence counsel of prosecution witnesses, upon the order of addresses of counsel, and upon the content of a judge’s directions to the jury.  These are integral parts of the criminal process.
  13. The use of the material obtained in this case distorted this usual process because the appellant “could no longer determine the course he would follow at his trial according only to the strength of the case that the prosecution proposed to, and did, adduce in support of its case that the offence charged was proved beyond reasonable doubt”.[59]  The consequence is “inescapable”.[60]
  14. No part of the criminal process imposes any obligation upon an accused person to assist the prosecution to prove its case.  Even the statutory requirement to give notice of alibi does not descend to that for it obliges notice be given of exculpatory material, not of incriminatory material, but even that change was made by an express provision.[61]
  15. It cannot matter whether an accused’s assistance is demanded by the prosecution after charges have been laid, as in X7 and De Vonk, or whether it becomes available fortuitously because an accused had earlier been compelled to give incriminating answers for some other purpose.  The effect upon the administration of justice will, in each case, be exactly the same, as X7 and Lee (2014) demonstrate.
  16. The express objects of Division 355 and the general language of s 355-50 do not give rise to a necessary implication that the fundamental principle identified in X7 has been abrogated.  For tax related offences there is no indication that the objects of the legislation, as expressed in s 355-10 or as implied by the text of Division 355 itself, would be defeated if the general language of s 355-50 were read as not permitting the use by the prosecution in this case of the evidence obtained from the accused about the subject matter of what later became the charges against him[62] and, as I have said, no such submission was advanced by the respondent on appeal.
  17. I also observe that this appeal was argued upon the common assumption between the parties that the expression “related to a taxation law” in s 355-50 was apt to refer to the charges in this matter.  The Court heard no argument about the validity of that assumption.  Because of the conclusion that I have otherwise reached, it is not necessary to consider that particular issue, which can await another occasion.
  18. For these reasons I would hold that the use of the material by the prosecution constituted a miscarriage of justice and, as a result, the verdicts of guilty should be quashed.
  19. As to the remaining grounds, I agree with the reasons of Applegarth J that they should be rejected.
  20. I would order that the convictions be quashed and that there be a retrial.
  21. PHILIPPIDES JA:  I have had the considerable advantage of reading the draft reasons for judgment of the President and of Applegarth J.  I agree with the President’s reasons and with the orders his Honour proposes.
  22. APPLEGARTH J:  The appellant was convicted of 44 dishonesty offences.  Forty-three were offences under the Criminal Code (Cth) being:
  1. 19 counts of obtaining a financial advantage by deception;
  1. 3 counts of attempting to obtain a financial advantage by deception; and
  1. 21 counts of knowingly using a false document with the intention of dishonestly obtaining a gain.

The remaining count charged the offence of fraud with circumstances of aggravation, contrary to s 408C(1)(a) of the Criminal Code (Qld).

  1. At the relevant time the appellant was a solicitor in private practice.  The successful prosecution case against him was that:
  1. he lodged numerous Business Activity Statements with the Australian Taxation Office claiming refunds of GST on behalf of two trusts, and dishonestly asserted that those trusts had incurred expenses in respect of property developments, when he knew that they had not done so;
  1. he claimed GST refunds totalling $1,572,181;
  1. he received refunds totalling $1,311,761 to which he knew the trusts were not entitled; and
  1. he attempted to obtain $260,420 in refunds.

Some of the BAS documents that had been submitted by the appellant between January 2007 and October 2009 were selected by the ATO for verification.  The appellant supplied documents to the ATO, seeking to substantiate the expenses claimed.  Most of the documents were tax invoices.  The prosecution case was that those documents were false, and that the appellant knew that they were false.  The evidence at the trial was that they were not generated by the businesses in question.  An inference was that the appellant had created them.

  1. On or about 12 February 2010, during the course of an audit, the ATO issued notices under s 353-10 of Schedule 1 of the Taxation Administration Act 1953 (Cth) (“TAA”) to the appellant.  Those notices required him to give evidence on oath or affirmation and to produce documents on 18 March 2010.  At around the same time, the ATO sought reimbursement of GST refunds paid to the trusts.
  2. On 16 March 2010 the ATO received two letters from the appellant’s firm which contained two cheques totalling $1,083,271.  Those payments were sourced from moneys which had been held in the appellant’s trust account on behalf of the estate of Audrey De Graff.  The final count proven against the appellant was that he fraudulently used those funds to repay money which he had fraudulently obtained from the ATO.
  3. The 18 March 2010 ATO examination was found to have been conducted for a proper purpose.  The uncontested evidence was that Ms Belinda McDonald, an ATO auditor who conducted the interview, held suspicions at that time that the two trusts were not entitled to claim the GST refunds, but did not believe that the appellant or any other person had committed a criminal offence in relation to the Business Activity Statements submitted.  Ms McDonald’s role as an auditor was to monitor compliance with taxation legislation and assess the amount of tax which should be paid by a taxpayer.  She had no involvement in investigating criminal activity, that being the role of the Serious Non-Compliance Unit of the ATO.
  4. The audit process ended in about August 2010.  Subsequent investigations within the ATO commenced in November 2010.
  5. In September 2011 an officer of the ATO forwarded a brief of evidence to the Commonwealth Director of Public Prosecutions.  It included a transcript of the compulsory examination.  The view taken was that it was appropriate to release that information to the CDPP pursuant to s 355-50 of Schedule 1 of the TAA.  The appellant was charged on 23 March 2012.
  6. In 2014 the appellant applied for a permanent stay of the indictment.  The pre-trial application related to the evidence he gave at the compulsory examination on 18 March 2010.
  7. The appellant argued that the disclosure to the CDPP of his 18 March 2010 examination was not authorised by s 355-50.  A judge of the District Court considered the arguments, which turned upon the proper interpretation of the provisions of the TAA.  Section 355-50 was found to authorise disclosure of the record of the interview to the CDPP for the purpose of criminal proceedings related to a taxation law.  The judge concluded that the provisions of s 355 were intended to regulate a system for the disclosure and use of confidential information.
  8. The judge also recognised that the Court may interfere, even if material which has been compulsorily obtained may be disclosed pursuant to a specific authorisation of the kind contained in s 350-50, where the use of the material would amount to an abuse of process.  One example is where the compulsory procedure has been resorted to after charges are before the Court.  However, in this case the compulsory examination and the release of the material occurred before any Court processes had begun, and were explicitly authorised by the legislation.
  9. The legislative scheme was found to abrogate an individual’s right not to incriminate himself or herself and remove the “right to silence”.  In this regard, the primary judge followed two decisions of the Full Federal Court.[63]  The appellant does not challenge the correctness of those decisions, or the judge’s conclusion that the effect of s 353-10 is to remove the privilege against self-incrimination and the “right to silence”.  The judge concluded that the legislation permitted the material obtained under the compulsory powers contained in s 353-10 to be used at the trial of the individual who was compulsorily examined, provided that use did not amount to an abuse of process.  Because the interview was conducted pursuant to s 353-10 for a proper purpose before any court process had begun, the judge concluded that there was no abuse of process.
  10. The application for a permanent stay of the indictment was refused.  The application sought, in the alternative, orders to ensure that the prosecution proceed without any advantage from the compulsorily obtained evidence.  Based on the same reasoning, this alternative part of the application was refused.
  11. Evidence of the interview that was conducted by the ATO on 18 March 2010 was admitted into evidence at the trial.
  12. The grounds of appeal relate to four matters:

I. The dismissal of the 2014 stay application

II. The refusal to order separate trials

III. The absence of jury directions about exculpatory provisions

IV. The jury direction about authority.

I. The appeal over the dismissal of the 2014 stay application

  1. The appellant’s first ground of appeal is that the judge in 2014 erred in law in not granting a permanent stay of the prosecution, or in not making orders to ensure that the prosecution proceed without any advantage from the compulsorily obtained evidence.  He argues that, as a result of those orders not being made in 2014, the compulsorily obtained evidence was used as evidence in his trial and, as a consequence, a miscarriage of justice has occurred.
  2. The appellant’s essential argument to the primary judge was that disclosure to the CDPP was not authorised by s 355-50, and that subsequent reliance upon the interview made a permanent stay order the appropriate course.  The appellant did not challenge the proposition that s 355-10 abrogated the appellant’s privilege against self-incrimination.  Instead, he relied upon the right to a fair trial under an accusatorial system of justice.[64]
  3. Particular reliance was placed upon one aspect of the decision of the Full Federal Court in Deputy Commissioner of Taxation v De Vonk.[65]  The statutory scheme considered in De Vonk did not authorise a compulsory examination into criminal charges the examinee was then facing for the purpose of gathering evidence for use in the prosecution.  A compulsory examination in those circumstances might constitute an interference with the administration of justice.  Also, as appears in the appellant’s submissions on this appeal, De Vonk was decided before the enactment of s 355-50.
  4. The appellant in 2014 submitted that neither s 355-50 nor s 355-70 authorised the ATO to release confidential information or abrogated common law privileges associated with the accusatorial system of justice, including the privilege of not being required to disclose a defence.  According to the appellant’s argument, the provisions simply provided a legislative regime to protect ATO officers from what would otherwise be an offence.
  5. In response, the prosecution distinguished the authorities upon which the appellant relied as cases in which the transcripts of a compulsory examination had been distributed in breach of a prohibition on publication.  For example, in R v Seller,[66] the transcripts of a closed hearing of the Australian Crime Commission were disclosed by the ACC to an officer of the CDPP at a time when that was prohibited by a non-publication order.  By contrast, s 355-50 was a specific statutory authorisation to disclose certain material to, among others, the CDPP for the purpose of a criminal proceeding.
  6. The judge who decided the 2014 application carefully analysed the statutory scheme in which s 355-50 appeared.  His Honour considered the appellant’s contentions about the proper interpretation of the legislation and concluded that s 355-50 clearly authorised the release and use of the evidence obtained at the compulsory examination for the purpose of a criminal trial.  The judge was conscious that because of the effect such measures may have on the “fundamental right of the accused to a fair trial, such legislation must be clear and unambiguous”.[67]  However, s 355 regulated the disclosure and use of such confidential information.  That s 355 authorised the release and use of such material was made clear by both the words of the legislation and the Explanatory Memorandum to the 2010 amendments, which contained examples of the disclosure of information for the purpose of proceedings, including criminal proceedings, related to a taxation law.[68]
  7. Section 355 was an explicit abrogation of the traditional rights of an accused, and the CDPP was an “entity” for the purpose of s 355-50 to which an authorised disclosure could be made.  The relevant disclosure in this case was made to that entity “for the purpose of criminal … proceedings … that are related to a taxation law”.  The judge rejected the appellant’s argument that the release could not be for such a purpose because at the time of the release of the information to the CDPP there were no criminal proceedings in existence.  The term “for the purpose of criminal proceedings” also meant for the assessment by prosecution authorities as to whether criminal charges should be preferred.[69]
  8. In summary, in 2014 the primary judge rejected the appellant’s contentions about the proper construction of the statutory scheme, and found that it was explicit in permitting use of the material obtained at the compulsory examination at the trial of the individual, provided that use does not amount to an abuse of process.

The appellant’s arguments on appeal

  1. The appellant’s grounds of appeal and his written submissions did not seek to contest the correctness of the primary judge’s conclusion that the 18 March 2010 interview was conducted pursuant to s 355-10 for a proper purpose.  In oral submissions, the appellant’s counsel sought to argue that the auditors knew by 18 March 2010 that the appellant had supplied false documents, and were aware, or ought to have been aware, that their audit related to the commission of a criminal offence. However, this position was not put to the witnesses at the pre-trial hearing or at trial.  The auditors were not challenged about the purpose of their audit, and Ms McDonald gave unchallenged evidence that at the time of the interview she did not believe that the appellant or any other person had committed a criminal offence.
  2. The Court permitted the parties to make supplementary written submissions about principles governing the admissibility of compulsorily obtained evidence.  The respondent’s supplementary submissions did so.  The appellant’s supplementary submissions were not directed to this point, and attempted to argue factual matters not raised at pre-trial applications or at trial about what the ATO auditors must have known about the likelihood that the appellant would face criminal prosecution.
  3. In the pre-trial application in 2014 the appellant’s then counsel acknowledged and the primary judge accepted that the effect of s 353-10 was to remove the privilege against self-incrimination and the “right to silence”.[70]  This conclusion was based upon two decisions of the Full Federal Court: Binetter v Deputy Commission of Taxation[71] and De Vonk.[72]  The appellant does not appeal in respect of that question of law concerning the abrogation of the privilege against self-incrimination and the “right to silence”.  Instead, he reiterates his reliance upon the “cardinal principle of our system of criminal justice that the Crown must prove the guilt of an accused person”.[73]  One feature of the accusatorial system of criminal justice is that an accused person is not obliged to disclose his defence, or the information or means by which it might be propounded, so as to prejudice a fair trial, unless that common law privilege or entitlement is abrogated by statute.[74]
  4. The appellant’s submissions to this Court do not identify an error in the interpretation of the statutory scheme, in particular the primary judge’s interpretation of s 355-50 to the effect that the section authorises the use of material compulsorily obtained at an interview conducted pursuant to s 353-10 for the purpose of trial on criminal proceedings in relation to tax offences.  Instead, for reasons that were not fully developed in his written or oral submissions, counsel for the appellant appeared to argue that the potential of disclosure of the compulsorily obtained evidence might have to disclose his defence was sufficient to warrant a stay.  However, the present case is unlike one where:
  1. there was no statutory authorisation to disclose the contents of an ATO examination for the purpose of criminal proceedings; or
  1. disclosure of the transcripts of interviews was in breach of a prohibition on disclosure.

In addition, and unlike other cases in which a stay or other order has been made, the disclosure in this case occurred before any criminal proceeding had commenced.

  1. At the hearing of the appeal, the appellant’s arguments seemed to rest on some general proposition that compulsorily obtained evidence supplied to prosecuting authorities for the purpose of possible future criminal proceedings cannot be used:
  1. for the purpose of assessing whether criminal charges should be preferred, including by seeking to check with potential witnesses the truth of assertions of fact made during the interview; or
  1. at trial.
  1. As the respondent’s submissions noted, the appellant’s submissions do not engage with the primary judge’s reasons concerning the proper interpretation of the relevant statutory provisions which were found to authorise disclosure for those purposes.
  2. At the pre-trial hearing in 2014, the appellant did not advance an argument that, despite legislative authorisation to disclose the compelled evidence to the CDPP for the purpose of certain criminal proceedings, the compelled evidence was nevertheless not admissible at his trial because it was obtained under compulsion.  Despite this, during oral argument in the appeal his counsel embraced the contention that incriminating evidence, including statements which the prosecution contended were lies, which was obtained under compulsion was not admissible.  The Court directed the appellant to develop his argument in relation to admissibility in supplementary submissions.

The appellant’s supplementary submissions

  1. The appellant’s supplementary submissions did not address the issues to which they were supposed to be directed.  He did not reply to the respondent’s supplementary submissions about the admissibility of compulsorily and lawfully obtained evidence.  Instead, the supplementary submissions largely reiterated submissions made at first instance about the general principles of the criminal justice system, and the contention that the legislation did not authorise the dissemination and use of the compulsorily acquired material.
  2. On the question of authority, the appellant’s appeal submissions do not engage with the trial judge’s findings of fact or his interpretation of s 355-50 of the TAA in its statutory context.  Instead, they advance the argument that his compulsory examination by the ATO auditors, followed by further ATO investigations and the subsequent disclosure of the contents of the compulsory examination, placed him at a disadvantage.  This is because, armed with the appellant’s explanation of the conduct of the two trusts which claimed GST refunds, investigators spoke to potential witnesses, including the alleged trustee of the two trusts, who discredited the appellant’s account.  The fact that ATO auditors questioned him with respect to transactions that, in due course and after further investigation by the ATO, became the subject of alleged offences, did prejudice him.  This is because the evidence at trial showed he gave an account of transactions and the operation of the trusts that was largely untruthful.
  3. To the extent the appellant’s complaint relates to his compulsory examination, it is to be recalled that he was not being examined about offences, particularly offences with which he had been charged.  The auditors on 18 March 2014 were investigating the taxation affairs of the trusts, the appellant’s role in submitting BAS documents and receiving GST refunds and the documents, if any, which substantiated claims for GST refunds.  A substantial part of the interview involved the auditors trying to understand how the trusts conducted their affairs, undertook alleged property developments and paid expenses, as well as the appellant’s role in those matters.
  4. The appellant’s submissions rely on cases in which compulsorily obtained evidence relevant to a defence is disclosed to prosecuting authorities without authority or in contravention of a statutory prohibition or order.  There is no contest over the general principle that such an unauthorised disclosure may compromise the right to a fair trial.  If it does, the Court may make orders, including the exceptional step of granting a stay of proceedings.  However, those authorities are concerned with unauthorised disclosures of compulsory evidence, the contents of which prejudices an accused’s right to a fair trial.  The threshold issue with which the appellant’s submissions do not engage is why the primary judge was wrong in finding the disclosures in this case to be authorised by s 355-50 of the TAA.
  5. The appellant’s supplementary submissions refer to the conduct of investigators after the compulsory interview was concluded and make general assertions that the ATO “had a responsibility and obligation to ensure the Appellant’s common law rights were protected.”  The appellant has not explained why the ATO was not entitled to continue its investigations, including by seeking out persons and documents with a view to verifying or disputing the version of transactions given by the appellant in his compulsory interview.  The appellant’s common law rights hardly extended to preventing the ATO from further investigating the circumstances in which refunds were made of GST and the authenticity of tax invoices and other documents.  The appellant did not have a common law right to stop a tax investigation which inquired into many matters, including things which he had said in a compulsory interview.
  6. The appellant’s 2014 submissions, which he adopts in his supplementary submissions on the appeal, concede that the common law privileges of a person, including the right to silence and the privilege (as part of the adversarial system of justice) of not being required to disclose a defence, can be abrogated.  He submits, however, that “the legislation is ambiguous” on the matter of abrogation.  The appellant’s submissions about the abrogation of common law privileges tend to blur the separate statutory authority given to obtain evidence compulsorily at an examination and the statutory authority given by provisions such as s 355-50 to disclose such information to the CDPP for the purpose of a criminal proceeding.  Instead, he makes sweeping submissions that his “case and derivative evidence was gifted to the ATO and DPP whilst being questioned under compulsion”.

The compulsory examination

  1. Section 353-10 of the TAA grants the Commissioner power to require a person to give information, to attend and give evidence and to produce documents for the purpose of the administration or operation of a taxation law.  Section 8C of the TAA creates an offence to refuse or fail to give the requested information, to attend or to produce a document when required by a notice given under s 353-10.  Section 8D creates an offence to fail to answer questions when attending before the Commissioner.  The authorities establish that a person who is required to answer a question after being required by a notice under s 353-10 may not refuse to answer questions by relying upon the privilege against self-incrimination.[75]
  2. The primary judge found:

“It is clear that the interview conducted pursuant to s 355-10 was for a proper purpose. There is no suggestion otherwise. The issue is whether the disclosure of the information was authorised by the legislation.”[76]

There was no appeal from the trial judge’s finding that the interview was conducted for a proper purpose.  As noted, in oral and supplementary submissions upon the appeal there has been a belated attempt to explore what the appellant submits the ATO auditors must have known or suspected during the interview.  The appellant submits that neither auditor gave evidence as to their knowledge or belief at the completion of the interview that the appellant may face criminal sanctions.  However, neither auditor was questioned about this matter when the opportunity presented itself at the pre-trial hearings or at trial.  It is unfair to draw inferences about what the auditors may have believed and to conclude that the auditors must have known certain things.  Neither auditor was asked about these matters, nor was there an argument before the primary judge that the 18 March 2010 interview should have been suspended at some stage.  There is no sound basis upon which to overturn the primary judge’s finding that the interview was conducted by the ATO auditors for a proper purpose.

The disclosure of the compulsory interview to the CDPP

  1. Ms McDonald, the auditor, continued her investigations into the trusts until about August 2010.  Ms O’Bryan from the Serious Non-Compliance Unit of the ATO was given the task of investigating the trusts in November 2010.  She interviewed witnesses, obtained statements and with the assistance of the Australian Federal Police obtained documents from banks.  In company with AFP and ATO officers, she was present when warrants were executed at the appellant’s home and work premises in July 2011.
  2. In September 2011, a brief of evidence, which included the compulsory examination, was forwarded to the CDPP.  A lawyer from the CDPP, Ms Murphy, who gave evidence at the pre-trial hearing, reviewed the brief and considered that the compulsory examination was admissible.  She saw nothing wrong with it and did not detect any improper purpose associated with its preparation and disclosure to the CDPP.
  3. The statutory scheme covering the disclosure of “protected information” was analysed in some detail by the primary judge.[77]  Because the appellant’s submissions did not descend to any detail in explaining the respects in which the primary judge erred in interpreting the relevant provisions, it is sufficient for present purposes to summarise the statutory scheme, as more fully described by the primary judge.  Division 355 of Schedule 1 of the TAA provides for the confidentiality of taxpayer information.  One object of the Division is to protect the confidentiality of taxpayers’ affairs by imposing strict obligations on taxation officers and others who acquire protected tax information, and so encourage taxpayers to provide correct information to the Commissioner.  Another object is to facilitate efficient and effective government administration and law enforcement by allowing disclosures of protected tax information for specific, appropriate purposes.
  4. The interview with the appellant and the transcript of it constitutes “protected information”.  Division 355 provides a number of exceptions to what would otherwise be unauthorised disclosure of “protected information”.  Two exceptions are presently relevant.  The first is s 355-50 which relevantly permits disclosure by a taxation officer if the disclosure is to any entity, court or tribunal “for the purpose of criminal, civil or administrative proceedings (including merits review or judicial review) that are related to a taxation law”.  The other relevant exception is s 355-70, which concerns disclosure for law enforcement and related purposes.  One such permitted disclosure under s 355-70 is if the disclosure is to an “authorised law enforcement agency officer or a court or tribunal” and is for the purpose of:

“(a) investigating a serious offence; or

  1. enforcing a law, the contravention of which is a serious offence; or
  1. the making or proposed or possible making, of a proceeds of crime order, or
  1. supporting or enforcing a proceeds of crime order.”

The Division contains definitions of “authorised law enforcement agency officer” and “serious offence”.

  1. As the primary judge explained, s 355-70 is much broader in its terms than s 355-50, and permits disclosure of “protected information” to a number of entities, including State police forces and a range of other law enforcement agencies for the purpose of investigating “a serious offence”, which is defined in s 355-70(10) as an offence against an Australian law that is punishable by imprisonment for a period exceeding 12 months.  Disclosure under s 355-70 need not relate to a taxation law offence.  Whereas s 355-70 refers to investigating a serious offence or enforcing a law, the contravention of which is a serious offence, s 355-50 relevantly refers to disclosure for the purpose of criminal proceedings related to a taxation law.  It authorises disclosure not simply in relation to the investigation of offences.  The primary judge was conscious that legislation must be explicit if it has the effect of interfering with the traditional rights of an accused.  However, the relevant provisions were explicit as to such an effect.  If the terms of s 355-50 were ambiguous, then recourse to extraneous material, namely the Explanatory Memorandum to the Bill which introduced the provisions in 2010, made clear that the provision permitted disclosure to the CDPP in relation to proceedings related to a taxation law.  The Explanatory Memorandum gave an example of the ATO referring a matter to the CDPP for prosecution under a provision of the Criminal Code 1995.
  2. Contrary to the appellant’s arguments, the terms of s 355-50 were found by the primary judge to permit the disclosure of the information by the ATO when there were no criminal proceedings in existence.  The term “for the purpose of criminal … proceedings” included assessment of a prosecution and the preparation of criminal charges.
  3. In summary, the appellant’s submissions do not engage with the primary judge’s detailed analysis of the statutory scheme.  The primary judge applied established principles of statutory interpretation and was conscious of the principle that a provision which interferes with the traditional rights of an accused must be explicit.  However, the relevant provision is explicit in permitting the use of the material disclosed to the CDPP for the purpose of a criminal prosecution.  The primary judge did not err in his interpretation of the statutory scheme.

The purpose of the disclosure of the compulsory interview

  1. As noted, s 355-50 permits disclosure to the CDPP “for the purpose of criminal … proceedings … that are related to a taxation law”.  By late 2011 and after officers within the Serious Non-Compliance Unit of the ATO had conducted their investigations, the ATO had assembled substantial evidence of offences related to taxation law.  It is apparent that the disclosure of the compulsorily obtained evidence as part of a brief of evidence forwarded to the CDPP in September 2011 was for the purpose of criminal proceedings related to a taxation law.  Criminal charges were contemplated in relation to a taxation law.  The disclosure was for an authorised purpose.
  2. The fact that proceedings had yet to commence does not affect this conclusion.  The appellant does not press the argument advanced to the primary judge that the provisions of s 355-50 only apply if proceedings already are in existence.  The primary judge was correct to conclude that the phrase “for the purpose of criminal … proceedings” includes for the purpose of contemplated criminal proceedings.  The contemplated proceedings were for offences allegedly committed in respect of dealings with the ATO in relation to taxation obligations and therefore were proceedings “related to a taxation law”.  The fact that the briefed material may additionally have included evidence which permitted the appellant to be charged with a fraud offence under Queensland law does not alter the essential purpose of the disclosure of the compulsorily obtained evidence to the CDPP.  The disclosure of that evidence was authorised by s 355-50.
  3. The compulsory examination did not disclose evidence of the appellant defrauding the Estate of Audrey De Graff.  Neither the appellant nor the auditors made any mention of the estate.  The ATO auditors were not investigating any matter in relation to the Estate of Audrey De Graff.  Instead, they were investigating the taxation affairs of two trusts with which the appellant was associated, including claims for GST rebates.  Early in the interview, the auditors referred to two payments which had recently been received from the appellant and sought to clarify exactly what the payments were for.  In the course of the interview the appellant told a story about how the two trusts operated and how the alleged trustee, Mr Zheng, was undertaking certain property developments.  He explained how he came to lodge Business Activity Statements and the materials upon which they were based.  He also told the ATO auditors how the GST refunds went into his solicitor’s trust account, and how he had borrowed money from these trusts from time to time.  The appellant explained that he had borrowed other money to repay the loans to the two trusts.  He said that he had borrowed a little over $1 million from Mr De Graff, that he had done so in the last two weeks and that there was no formal loan documentation.  Importantly for present purposes, the appellant did not refer to the Estate of Audrey De Graff or suggest that he had borrowed the amount of a little over $1 million from that estate.  On the contrary, he said that he had borrowed the money from Mr De Graff who was a moneylender.
  4. The appellant complains that in the course of subsequent investigations the ATO spoke to Mr Warwick De Graff about the loan which the appellant said Mr De Graff had made to him.  As matters emerged, there had been no loan by Mr De Graff.  Instead, the appellant used monies held on trust on behalf of the Estate of Audrey De Graff to repay the ATO.
  5. The primary judge was of the view that, because of the alleged circumstances, namely the fraud on the estate was to repay an overpayment as a result of the alleged frauds on the ATO, the charge laid under s 408C of the Queensland Criminal Code was also a proceeding in relation to a taxation law.[78]  It was unnecessary for the primary judge to reach this conclusion.  The relevant issue is not whether the state charge as ultimately laid related to a taxation law, but the purpose of the relevant disclosure of the compulsorily obtained interview.  The obvious purpose of the disclosure to the CDPP was a contemplated criminal proceeding in relation to offences related to GST claims and refunds and was a proceeding which related to taxation law.  That did not cease to be the purpose of the disclosure because as a result of further analysis the appellant was able to be charged with a State fraud offence in addition to 43 Commonwealth offences.  The purpose of the disclosure clearly was with respect to contemplated criminal proceedings for offences against Commonwealth laws, and the contemplated proceeding related to a taxation law as defined in s 995-1 of the TAA.  The primary judge was correct to so hold.[79]
  6. The compulsorily obtained evidence did not disclose that the appellant had fraudulently used funds from a deceased estate.  The estate was not mentioned.  Because the compulsory interview did not disclose the State fraud offence with which the appellant was ultimately charged, no issue arises in relation to the use of powers of examination to investigate the appellant’s defrauding of the estate, or the disclosure of the contents of an examination which disclosed the commission of such an offence.

The appellant’s reliance upon De Vonk

  1. The appellant’s supplementary submissions reiterate parts of written submissions made in March and May 2014 in support of the application for a stay due to the prosecution’s reliance upon the compulsorily obtained evidence.  One part of the appellant’s submissions in May 2014 was that “De Vonk authoritatively resolved the abuse of process point in Mr Leach’s favour”.  The appellant continues to rely on this contention.
  2. Mr De Vonk and five others were charged with conspiracy to defraud the Commonwealth.  Some of the charges related to alleged dishonest representations to the ATO about the income of a partnership.  Three days after the indictment, Mr De Vonk was served with a notice under s 264 of the ITAA requiring him to attend and give evidence about matters, including the income of the partnership.  It was conceded on behalf of the Deputy Commissioner that the officers who were to conduct the inquiry under s 264 proposed to inquire into matters that would bear upon the offences with which Mr De Vonk had been charged and would cover the factual circumstances the subject of the criminal charges.[80]  The question that arose in that case was whether there was anything in the context of the legislation which led to the conclusion that Parliament intended that the power to interrogate under s 264 could be used in circumstances “where so to do might tend to constitute a real risk of interference with the administration of justice.”[81]  The Court concluded that the legislature should not be taken to have intended to authorise the compulsory interrogation of persons in circumstances where so to do might constitute an interference with the administration of justice, civil or criminal.[82]  It ruled that the conduct of the compulsory interrogation be deferred pending the conclusion of the criminal proceedings.  Foster J additionally observed that the use of the investigative powers provided for by s 264 “for the collateral purpose of obtaining evidence for use in a prosecution already launched, would be an improper purpose and one which would vitiate the use of the power.”[83]
  3. De Vonk is distinguishable from this case.  It involved the improper use of inquisitorial powers after De Vonk had been charged for the purpose of obtaining evidence for use in a prosecution already launched.  There was no legislative authority to use the compulsory interrogation power for such a purpose, and there was a risk of interference with the administration of justice.  By contrast, in this case the appellant was not charged with any offence at the time of his compulsory examination.  The compulsory examination was found to have been conducted for a proper purpose.  The interview on 18 March 2010 was for the purpose of obtaining information for “the collection and protection of the revenue”.[84]
  4. Contrary to the appellant’s submissions, De Vonk does not authoritatively resolve the abuse of process point in his favour.
  5. Moreover, De Vonk does not assist the appellant in respect of the subsequent use by investigators within the ATO, or the subsequent disclosure by the ATO to the CDPP, of the compulsorily obtained evidence.  The legislation considered in De Vonk did not contain a provision authorising the disclosure of the relevant information to the CDPP for the purpose of a criminal prosecution.  The appellant’s written submissions on the appeal dated 31 January 2018 acknowledge the legislation under which De Vonk was compulsorily examined did not permit the provision of the transcript the examination to prosecutorial authorities.  The statutory scheme of which s 355-50 formed a part did so.

The appellant’s reliance on general principles derived from X7, Lee v NSW Crime Commission and Lee v The Queen

  1. The appellant’s 2014 submissions cite relevant principles by reference to authorities, including the leading cases of X7 v Australian Crime Commission,[85] Lee v New South Wales Crime Commission,[86] and R v Seller.[87]  It is unnecessary to essay the facts of those cases or of Lee v The Queen,[88] which have been analysed by this and other courts in recent times.[89]  The relevant principles, about which there is no contest, include:
    1. The fundamental right to a fair trial;
    2. The criminal trial process is accusatorial, and the whole process of criminal justice, commencing with the investigation of crime and culminating in the trial of an indictable offence is accusatorial;[90]
    3. A fundamental principle of our system of justice is that the prosecution must prove the guilt of an accused person;
    4. A companion principle known as the privilege against self-incrimination is that, absent lawful authority, an accused cannot be compelled to admit the offence with which he or she is charged;
    5. The presumption of innocence, the privilege against self-incrimination and the right to silence are important elements of the accusatorial system of justice;[91]
    6. An additional feature of the accusatorial system of criminal justice is that, absent legislative provision to the contrary, an accused person is not obliged to disclose his or her defence or the information or means by which it might be propounded so as to prejudice a fair trial;[92]
    7. Common law entitlements, including the privilege against self-incrimination and the right to not disclose a defence, may be abrogated by statute.  Clear words or words of necessary intendment are necessary for this to be done.[93]

These principles were recognised and applied by the primary judge.

  1. The appellant’s submissions on appeal place particular reliance upon statements of principle in X7.  The issue in this appeal, however, differs from the issue raised in X7.  In X7 the appellant had been charged with an indictable offence.  He was required to attend before an examiner of the Australian Crime Commission and to answer questions about the subject matter of the pending charge.  The issue was whether the Australian Crime Commission Act authorised an examiner to require an accused person to answer questions about the subject matter of the pending charge.  The majority held that the legislation neither expressly nor by necessary intendment authorised the examination of a person with respect to offences of which that person was charged and his trial was therefore pending.  To permit a compulsory examination in those circumstances would effect a fundamental alteration to the accusatorial system of criminal justice and such an alteration could only be made by express words or by necessary intendment.  The legislation contained no reference to examination of a charged person and did not clearly deal with the case of a witness who was being examined about the subject matter of an offence with which that person had been charged and whose trial was pending.[94]  The majority was not persuaded that the legislature had directed its attention to the effect of an examination in such circumstances on the fundamental principle which informs the criminal justice system, and whether such an examination may pose a real risk of interference with the administration of criminal justice.
  2. In X7 the essential issue was the lawfulness of an individual’s examination by the Australian Crime Commission in circumstances in which the person was already charged with offences the subject of the examination.  The present case is not concerned with such an issue.  The compulsory examination of the appellant in March 2010 occurred at a time when he was not facing criminal charges, and the compulsory examination was not conducted for the purpose of obtaining evidence to support the laying of criminal charges.  The tax auditor’s powers of examination were not exercised for an improper or collateral purpose of gaining evidence for use in a criminal proceeding.  The examination was conducted for the proper purpose of obtaining information in the course of a taxation audit in the exercise of a power granted under s 353-10 for the protection of the revenue.
  3. Other post-X7 authorities have raised different issues, such as the provision of the transcripts of examinations to the CDPP contrary to a direction made under the Australian Crime Commission Act 2002.[95]  The principles which were applied in those cases are not in dispute.  Their application depended upon the factual and legislative context in which issues arose in those cases.  This included legislation which restricted the use of the contents of compulsory examinations.
  4. The leading authority of Lee v The Queen concerned the unlawful disclosure of the transcript of evidence of an examination before the New South Wales Crime Commission.[96]  The disclosure was made to the DPP, at the DPP’s request, in order that the DPP could ascertain any defences the appellants might raise and this aspect altered the trial in a fundamental respect.[97]  Whilst the relevant Act provided extraordinary powers to compel the giving of evidence, it also provided safeguards and obliged the Commission to make a direction prohibiting the publication of evidence before it, if not to do so might prejudice the person’s fair trial.  The provisions supported the maintenance of the system of criminal justice referred to in X7.  The purpose of protecting a fair trial was not met in that case, with the consequence that the appellant’s trial differed from what fundamental principle and the relevant legislation required.  The disclosure of the transcript was not authorised by the Act and the decision to release it was made without regard to the protective purpose of the provisions of the Act.
  5. The High Court in Lee v The Queen restated the fundamental principle of the common law that the prosecution is to prove the guilt of an accused person.[98]  The privilege against self-incrimination may be lost, but the fundamental principle remains as an aspect of the accusatorial nature of the criminal trial in our system of criminal justice.[99]  The companion rule to the fundamental principle is that an accused person cannot be required to testify.  As the Court in Lee v The Queen stated:[100]

“The prosecution cannot compel a person charged with a crime to assist in the discharge of its onus of proof.”

In Lee v The Queen the circumstances involved the “wrongful release and possession of evidence”.[101]  That altered the criminal trial in a fundamental respect, and there was no legislative authority for the alteration.  As the High Court observed, what occurred was “contrary to the evident purpose of s 13(9) of the NSWCC Act, directed to protecting the fair trial of examined persons”.[102]

  1. This case is distinguishable from Lee v The Queen.  Section 13(9) of the NSWCC Act provided for the Commission to direct that evidence given before it or certain other information not be published, or be published only in a limited way, and that such a direction should be given if the failure to do so might, among other things, prejudice the fair trial of a person who had been or might be charged with an offence.  In this matter, legislation authorised disclosure of the compulsorily obtained evidence to the CDPP for the purpose of a criminal proceeding related to a taxation law.
  2. This case does not involve legislation which made evidence obtained at a compulsory examination inadmissible at trial.[103]  This is not a case in which legislation, which abrogated the privilege against self-incrimination, contained a blanket protection against the direct or derivative use of the evidence so obtained.  The enactment of s 355 of the TAA, and the terms of s 355-50 in particular, indicate a clear legislative intent for such evidence to be provided to the CDPP for the purpose of certain kinds of criminal proceedings.
  3. The appellant at first instance did not contend that there had been an improperly conducted compulsory examination and he failed to show that there had been an unauthorised disclosure of the examination to the CDPP.  He did not establish that the prosecution was an abuse of process.  His arguments about the proper construction of s 355 and the application of authorities like De Vonk were correctly dismissed by the learned primary judge.

The point of statutory construction

  1. The essential issue raised by the first ground of appeal is whether s 355-50 of the TAA, in authorising the disclosure of compulsorily obtained evidence for the purpose of a criminal proceeding of the present kind, implicitly authorises the use of that evidence in such a proceeding against the examinee.
  2. There can be no doubt that such use alters a fundamental aspect of the criminal justice system because the prosecution is equipped with evidence obtained from the accused under compulsion which aids it to prove its case, and this impedes the course the accused might follow at trial, including the decision to give evidence and the kind of evidence he might give in his defence.  The issue of statutory construction, however, is whether the use at trial of the evidence disclosed to the prosecution for the purpose of a criminal proceeding is implicitly authorised.  In my view, it is.
  3. Such use accords with the statutory purpose of facilitating law enforcement by allowing disclosures of protected tax information for specific purposes.  Unlike s 355-70, which relevantly is concerned with investigating certain serious offences, the relevant exception in s 355-50 in this case is concerned with the prosecution of certain taxation offences because the authorised recipient is the Commonwealth Director of Public Prosecutions.[104]  The fact that other kinds of prescribed “protected information” may be disclosed does not diminish the fact that the disclosure to the CDPP of information compulsorily obtained under s 353-10 is authorised.  The authorised disclosure is to the prosecution for the purpose of a criminal proceeding, and deploying evidence at trial is for such a purpose.  I am not persuaded that the legislature authorised disclosure to the CDPP for the purpose of specified criminal proceedings, but did not intend the evidence to be deployed in those very proceedings.  In my view, it clearly did.
  4. The fact that there is no express provision which makes the evidence admissible is, in my view, unremarkable.  If the evidence may be used in a prosecution for tax offences and is relevant, then it is prima facie admissible.  Absent a provision which renders such evidence inadmissible, the admissibility of the evidence is determined by principles governing the admissibility of compulsorily obtained evidence.
  5. The relevant legislation creates a special exception for tax-related prosecutions, by which properly obtained evidence is disclosed to the Commonwealth prosecuting authority for the purpose of a criminal proceeding.  The fact that s 355-50 has other work to do does not alter the fact that one of the things it does is to authorise the disclosure of compulsorily obtained evidence to the prosecution for the purpose of a criminal proceeding of the kind which the appellant faced.  The primary judge was correct to conclude that the legislature clearly intended to authorise the release and use of material so obtained on the trial of the examinee, and to thereby affect a fundamental entitlement of an accused.
  6. In my view, it is implicit that the evidence which the legislature authorised to be disclosed for the purpose of a criminal proceeding may be used in that very criminal proceeding.  This is, of course, subject to any separate basis upon which to contend that the prosecution constitutes an abuse of process, and subject to any common law rules or statute governing the admissibility of the evidence.

The use made of the material at the appellant’s trial

  1. The admissibility of the evidence of the compulsory examination was not further challenged in a pre-trial application by the appellant.  Instead, in February 2017 as part of a pre-trial application which sought a separate trial of Count 44, the appellant’s then counsel raised an issue about s 10 of the Criminal Law Amendment Act 1894 (Qld).  After dealing with the substantive application on 16 February 2017, the primary judge noted that s 10 was concerned with the admissibility of confessions.  However, the prosecution intended to rely upon the appellant’s answers as lies.  Its case was that “when he attended the compulsory examination, the appellant did not confess – rather he gave an account that was largely untruthful.” The primary judge expressed the view that the answers given could not be classified as a “confession” so as to enable recourse to s 10 of the Criminal Law Amendment Act.  In that ex tempore ruling the primary judge noted that no application was made to exclude the material.
  2. When the matter came on for trial in May 2017, there was no renewed application to exclude the evidence of what was said by the appellant during the interview on 18 March 2010 with the ATO auditors.
  3. In broad outline, the defence position at trial was that the appellant had been unwittingly used by others as a conduit to submit false documents to the ATO, and had not been dishonest in his dealings with the ATO.  Although he did not give evidence at the trial, the compulsory interview included exculpatory assertions by him.
  4. As for the moneys used by the appellant to repay a little over $1 million to the ATO in March 2010, in his interview the appellant told the ATO auditors that the funds had been borrowed by him from Mr Warwick De Graff, who was said to have carried on a business as a money lender and who had lent the appellant a little over $1 million in the last few weeks without any formal agreement or formal loan documentation.  The appellant told the ATO auditors that he had borrowed the money in order to repay amounts he had borrowed from the two trusts so that the trusts could, in turn, repay the ATO.  The appellant did not mention anything about the estate of Audrey De Graff or any transactions in relation to it.
  5. Mr De Graff gave evidence at the trial that he was never approached by the appellant in 2010 for a loan and did not ever lend the appellant the sum in question.  He also gave evidence that he did not authorise in his capacity as executor of his mother’s estate a loan of more than $1 million to the appellant.  Mr De Graff’s evidence was that he signed a document headed “Trust Account Authority Estate of Audrey Conway De Graff” after meeting the appellant at the appellant’s offices, when the appellant produced the document and said it was necessary for Mr De Graff to sign it in order to disperse moneys to certain grandchildren in accordance with the terms of the will.
  6. The conviction on Count 44 is consistent with an acceptance of Mr De Graff’s evidence and a rejection of statements made by the appellant in his 18 March 2010 ATO interview to the extent they were inconsistent with the evidence of Mr De Graff.

Admissibility of compulsorily obtained evidence

  1. In the course of the hearing of the appeal, counsel for the appellant embraced an argument that, even if the disclosure of the material to the CDPP was authorised, the incriminatory evidence obtained under compulsion was nevertheless inadmissible.  The respondent’s supplementary submissions on this new argument addressed the issue of admissibility.  The appellant’s supplementary submissions which followed them did not develop, as expected, his oral argument about the inadmissibility of compulsorily obtained evidence.
  2. As to the admissibility of confessions and other out of court admissions, the respondent cites Tofilau v The Queen in which Gummow and Hayne JJ stated:

“There are three separate, but overlapping, inquiries that may have to be made in deciding whether evidence of an out-of-court confessional statement is admissible.  First, there is the question, commonly described as a question of ‘voluntariness’, presented when the confession in issue was made to someone identified as a ‘person in authority’.  Secondly, there may be the consideration of exclusion of evidence of the confession based upon notions of ‘basal voluntariness’.  Finally, there is the discretion to exclude evidence of the confession for reasons of fairness, reliability, probative value or public policy.”[105]

  1. In addition to the common law rule that confessions are not admissible unless they were made voluntarily, s 10 of the Criminal Law Amendment Act 1894 (Qld) provides:

“No confession which is tendered in evidence on any criminal proceeding shall be received which has been induced by any threat or promise by some person in authority, and every confession made after any such threat or promise shall be deemed to have been induced thereby unless the contrary be shown.”

The respondent submits that this section does not apply in this case because:

  1. neither of the ATO auditors who interviewed the appellant on 18 March 2010 was a “person in authority” as that term is defined; and
  1. the appellant did not confess.  Instead, he gave an account that was largely untruthful which the prosecution relied upon as lies demonstrating a consciousness of guilt.
  1. The respondent’s supplementary submissions note that the appellant did not seek the exclusion of the compulsory examination at any point in the pre-trial application on the basis that it was not voluntary, and did not seek exclusion on that basis during the trial itself.  In any event, the respondent submits that the principles relating to the exclusion of admissions on the basis that they were not voluntary do not apply in respect of the audit interview conducted on 18 March 2010.  Reliance is placed upon a statement of principle of Sholl J in R v Owen that:

“statements made by an accused person under proper compulsion of law when the law obliges him under penalty to speak the truth, are, though compulsory, nevertheless admissible unless (a) the law applicable has left open the right of the person to object to self-incrimination and (b) the objection has been taken at the time.”[106]

Reliance is also placed upon R v Zion,[107] which concerned the admissibility of admissions made during a compulsory examination of a bankrupt.

  1. Finally, the respondent submits that there was no basis for the discretionary exclusion of the interview in this case of the grounds of “unfairness”,[108] or by reason of the discretion founded upon public policy.  The interview was lawfully conducted, and the appellant does not contend that he was not treated fairly either before or during the interview.

The admissibility of confessions

  1. The admissibility of admissions or confessions at common law is said to depend upon two strict rules and on the operation of three “discretions”:

“The first strict rule is the ‘inducement rule’ of voluntariness: an admission by an accused person ‘is not voluntary if it is preceded by an inducement, such as a threat or promise, held out by a person in authority, unless the inducement is shown to have been removed.’  The second strict rule is that an admission is inadmissible if it is involuntary in the sense of what is known as ‘basal involuntariness’.  The first ‘discretion’ permits the court to exclude evidence if it has been obtained in an improper manner.  The second ‘discretion’ exists where ‘in all the circumstances it would be unfair to use [a voluntary confession] in evidence against’ the accused.  The third ‘discretion’ is the application to confessions of the ‘discretion’ to exclude evidence the prejudicial effect of which exceeds its probative value.”[109]

Do the rules about voluntariness only apply to “confessions” or do they extend to apparently exculpatory statements?

  1. In the present context the word “confession” is understood to mean an inculpatory statement and “extends from the most solemn, spontaneous, express and detailed acknowledgments of the facts constituting a crime to casual admissions of some only of the specific facts involving guilt”.[110]  The term “admission” is often used to mean an acknowledgment of key facts tending to prove guilt.  The statements in the compulsory examination relied upon by the prosecution were not of that character.  It relied on statements made by him that appeared to be exculpatory.  It did not rely upon those out of court statements as being true.  On the contrary, it asserted that they were lies and evidence of his consciousness of guilt.  This aspect raises a threshold question of whether one is concerned with a hearsay problem, the exception to the hearsay rule for confessions and other admissions of specific facts involving guilt and the requirements for the admissibility of confessions and admissions.
  2. There are substantial reasons to suppose that the voluntariness rule applies to confessions and other inculpatory statements, but not to exculpatory statements.[111]  The competing view is that apparently exculpatory statements which the prosecution relies on as being false and incriminating are subject to the same rules.  This view is captured in the words of Warren CJ in Miranda v Arizona:[112]

“[N]o distinction may be drawn between inculpatory statements and statements alleged to be merely ‘exculpatory’.  If a statement made were in fact truly exculpatory it would, of course, never be used by the prosecution.  In fact, statements merely intended to be exculpatory by the defendant are often used to impeach his testimony at trial or to demonstrate untruths in the statement given under interrogation and thus to prove guilt by implication.  These statements are incriminating in any meaningful sense of the word.”

In Piche v The Queen,[113] the Supreme Court of Canada, by a majority, followed this approach in 1971 and ruled that the prosecution cannot make use of any statement which was not given by the accused voluntarily, including an apparently exculpatory statement which the prosecution seeks to rely upon to discredit the accused at trial.  The Victorian Court of Appeal in R v Su tended to the view that statements by an accused which contained no admissions against interest and which were tendered by the prosecution solely as evidence of their having been made (and in no way as evidence as the truth of their contents) would be admissible only if made voluntarily.[114]  The Court cited Piche v The Queen and Miranda v Arizona in this context, but said it was not necessary to determine that difficult question.

  1. A similar point was raised by the respondent’s submissions in the context of s 10 of the Criminal Law Amendment Act 1984 (Qld).  However, that section refers to a “confession”.  Whilst the respondent’s submissions do not cite any authorities as to the meaning of “confession” in that statutory context,[115] there is authority for the proposition that s 10 relates to statements of a confessional nature, and does not apply to incriminatory statements which may appear exculpatory, but which are used in a case as evidence tendered to show guilt, for example, by proving false denials.[116]  The respondent’s submission that s 10 does not apply to statements made in the interview because they did not constitute a “confession” within the meaning of that section should be accepted.
  2. The resolution of the similar issue in respect of the common law rules governing voluntariness is not so simple, and this Court was not assisted by the respondent or the appellant with cases on point.  If the view which the Victorian Court of Appeal tended to favour in R v Su was adopted, then the voluntariness rule might extend to an incriminating statement which was not a “confession” but which was incriminating as showing guilt, for example, because untrue statements were said to show a consciousness of guilt.  A full consideration of the issue would require a detailed consideration of the purpose of the voluntariness rule.  For present purposes, it is sufficient to say that rules based on voluntariness, fairness and public policy are supported by different policies.  They include considerations of reliability, policies against the use of improper or illegal methods to obtain confessions, and considerations of human dignity and fairness.
  3. The voluntariness rule may be seen as a reflection of the privilege against self-incrimination on the basis that the privilege requires a person to be accorded a free choice whether to confess or otherwise incriminate, and that such a free choice should not be overborne.  If the voluntariness rule at common law is concerned with according a free choice to not make statements which are in fact incriminating, then it might extend to statements which are apparently exculpatory, but relied upon by the prosecution as proving guilt by implication, rather than as a direct admission of guilt or an admission of some other fact which the prosecution is required to prove.
  4. If, however, the voluntariness rule is about a narrower category of incriminating statements, the truth of which the prosecution relies upon as an exception to the hearsay rule, then the present case does not engage the voluntariness rule.  This is because the appellant’s answers at the ATO were relied upon by the prosecution, not for their truth, but because they were said to show lies.
  5. The appellant’s supplementary submissions did not address the issue or even respond to the respondent’s narrower submissions about the application of s 10 of the Criminal Law Amendment Act 1894.  That part of the appeal concerning the appellant’s pre-trial application for a separate trial in relation to Count 44 (to be considered below) does not raise any issue concerning an incidental argument in that context about s 10 of the Criminal Law Amendment Act.  It does not raise an argument that the primary judge erred in concluding that it was probably wrong to class the statements made as a “confession” so as to enable recourse to s 10.  Moreover, as the primary judge noted when he dealt with the severance argument, there was no application before him to exclude material on the basis that admissions made in the interview were inadmissible by reason of s 10 or were the result of inducements or coercion.
  6. Whilst unassisted by submissions on the point, it is appropriate to express a view about the scope of the common law voluntariness rule.  The voluntariness rule supports the “right to silence” and the privilege against self-incrimination by ensuring that incriminating statements are only admissible when made in the exercise of a free choice to speak or remain silent.  Given the purpose of the rule, it should not matter whether the incriminating statement is an incriminating admission, or a statement which, while apparently exculpatory, is in fact incriminating.  Improper compulsion which deprives an individual of the free choice to exercise the right to remain silent should render an incriminatory statement made as a result of the compulsion inadmissible because of the voluntariness rule.

Inducement by a “person in authority”

  1. The appellant’s supplementary submissions did not reply to the respondent’s contention (made without reference to authority) that neither the ATO auditors who participated in the examination was a “person in authority” as that term is understood in the context of s 10.  At common law, a “person in authority” for the purpose of the voluntariness rule has been defined to include any person who is seen by the accused, by virtue of his position, as capable of influencing the course of the prosecution, or the manner in which the accused is treated in respect of it.[117]  In the context of s 10 of the Queensland Act, this Court has held that “a person in authority” is to be determined by the impression or perception which the accused person might have in relation to the person, rather than the person’s actual authority, objectively ascertained.[118]
  2. The issue of whether the ATO auditors were “persons in authority” for the purpose of the common law voluntariness rule was not the subject of pre-trial argument over the admissibility of the interview.  The auditors were not involved in investigating criminal activity: that being the role of the Serious Non-Compliance Unit of the ATO.  No criminal prosecution was pending at the time of the interview.  The appellant did not give evidence that he believed at the time of the interview that the auditors were in a position to affect the outcome or the course of a future criminal prosecution.  In the absence of any argument on this point from the appellant in pre-trial applications, at trial or in his supplementary submissions on the appeal, I am disinclined to conclude that either auditor was a “person in authority” for the purpose of the voluntariness rule.

The application of the voluntariness rule to authorised, compulsory questioning

  1. The rules about voluntariness are concerned with the issue of whether the maker of the confession or other admission made the relevant statement in “the exercise of a free choice to speak or remain silent”.[119]  A statement which is obtained under statutory compulsion during an administrative examination, at the outset of which the examinee is told that a refusal to answer questions constitutes an offence and that the privilege against self-incrimination is not an excuse for failing to answer a question, hardly seems “voluntary” in this sense or at all.  However, consideration of the voluntariness rule and certain authorities support the conclusion that if the privilege against self-incrimination is abrogated by statute, and no other protection exists against the use of answers, such as a statutory protection against their use or judicial controls over the use of an examination for an improper or unauthorised purpose, then the answers may be used for the purpose of obtaining a conviction of the examinee.
  2. Rules about voluntariness and other rules governing the admissibility of confessions and other admissions have a variety of purposes.  They proceed on the basis that, absent some lawful authority, government officials are not entitled to demand answers.  The rules are protective of a citizen’s “right to silence”.  That right is reinforced in some contexts, such as police questioning, by rules which require a person to be told that he or she is not obliged to answer questions.  In addition to the “right to silence” by which a person is entitled to refuse to answer questions, whether the answers be incriminatory or not, there is the privilege against self-incrimination.
  3. Rules such as the voluntariness rule, which rest upon the “right to silence” and the privilege against self-incrimination, hardly seem apposite to official questioning in which the official is authorised to demand answers, the person being questioned commits an offence if he or she fails to answer the questions and the privilege against self-incrimination is abrogated.  The policies which underpin the voluntariness rule are displaced by laws which authorise compulsory questioning, require answers on pain of penalty and abrogate the privilege against self-incrimination.  The voluntariness rule applies in the usual context where the interrogator lacks lawful authority to demand an answer and an answer obtained under compulsion is rendered inadmissible because it was not the result of a free choice to remain silent.  It does not apply when the compulsion is lawful and proper.
  4. In R v Owen,[120] Sholl J considered an objection to the admissibility at a criminal trial of statements made by the accused to a member of the staff of the Official Receiver in Bankruptcy.  The objection was on the basis that the things which the accused stated were not voluntary and were therefore inadmissible.  The relevant statements were made by the accused and documents were filed by him pursuant to obligations imposed by the Bankruptcy Act.  In stating the voluntariness rule, Sholl J referred to the principle that a statement made by an accused person and tendered as an admission or confession is not admissible unless it is “voluntary in the sense in which the word has been defined by the law, i.e., not made under improper or undesirable compulsion”.[121]
  5. Another statement of principle by Sholl J was that statements made by an accused person “under proper compulsion of law, when the law obliges him under penalty to speak the truth, are, though compulsory, nevertheless admissible” unless the privilege against self-incrimination applies and objection is taken at the time.[122]
  6. Applying those principles, Sholl J ruled that the answers given by the accused, having been given in pursuance of obligations under the Bankruptcy Act, were admissible.  The parties to the interview understood that the accused was acting under compulsion and there was nothing improper in the exercise of authority, no improper question and no improper promise of favour or advantage.
  7. A similar issue arose in R v Zion in which the defendant was on trial for theft and obtaining property by deception.[123]  The issue arose as to whether the prosecution could lead evidence of answers given by him during a compulsory examination pursuant to the Bankruptcy Act 1966 (Cth).  Murphy J noted the difficulty of applying the word “voluntary” as it is understood in the context of the voluntariness rules to a statement made on oath under statutory compulsion during an administrative examination.  As he observed, the very fact that the examination is compulsory and that questions must be answered and that the privilege against self-incrimination is abrogated, “appear to run altogether counter to the exercise of a free choice to speak or be silent”.[124]  However, authority indicated that a similar protection to the privilege against self-incrimination cannot be demanded “where the question was lawful and the party examined was bound by law to answer it”.[125]  After considering the authorities, Murphy J concluded:

“… if the privilege against self-incrimination is abrogated by statute, as it is here, and nothing more appears in the statute to limit or prohibit the use of answers given as a result of such a statutory abrogation, there is much merit in concluding that it was legislatively intended that such answers could be used as evidence for the purpose of obtaining the subsequent conviction of the examinee on a criminal charge.  Otherwise, it might be asked, how could they incriminate?”[126]

As a result, the compulsory public examination was available for use in a subsequent criminal proceeding against the bankrupt.

  1. Whilst provisions for the compulsory examination of bankrupts and individuals who have taken part in the administration of corporations may be regarded as exceptions to the accusatorial system of criminal justice,[127] the principle applied by Murphy J in R v Zion would appear to be correct.  The voluntariness rule does not apply to evidence obtained under lawful and proper compulsion.

Abrogation of the privilege against self-incrimination without restrictions on the use of compulsorily obtained answers

  1. A statute which abrogates the privilege against self-incrimination and which does not provide protections against the use of answers compulsorily obtained seemingly contemplates the use of incriminating evidence at some future time in the event criminal proceedings are later commenced.
  2. Abrogation of the privilege against self-incrimination does not render the answers obtained in response to compulsory questions prima facie inadmissible on the grounds of voluntariness or unfairness.  Were this so, there would be no need when the privilege against self-incrimination is abrogated to enact non-use provisions and other statutory protections against the use of answers.  The enactment of such provisions tends to suggest that there is no general rule that incriminating evidence, including statements which the prosecution contends are lies, which is obtained under compulsion is inadmissible.  Although the answers obtained under compulsion are not “voluntary” in the sense of having been made in the exercise of a free choice to speak or to be silent or in any other sense, the answers are obtained under lawful compulsion.  The authorities of R v Owen and R v Zion support the proposition that the voluntariness rule, which is concerned with improper compulsion, does not apply where a person is required to answer questions under proper compulsion of law.
  3. Subject to considerations which arise in respect of the improper use of compulsory examination powers for the purpose of aiding the prosecution in a criminal proceeding which has commenced and other circumstances in which the exercise of compulsory examination powers may be improper, answers obtained under lawful compulsion are not inadmissible simply because the accused was deprived of a free choice to speak or to be silent.
  4. The abrogation of the privilege against self-incrimination without corresponding protection against the use of compulsorily obtained answers tends to signal a legislative intent that answers should be used in the public interest so as to ensure effective compliance with the law and the successful prosecution of the guilty.  Courts have repeatedly expressed the view that the privilege against self-incrimination is an important human right.  The rationales for the rule include systemic justifications related to the criminal justice system, including the prevention of abuse of power.[128]  The rationales include the preservation of human dignity, and the unfairness of making a person face a “cruel trilemma” of having to choose between refusing to provide information (and thereby risk punishment), providing the information requested (and thereby furnishing evidence of guilt) or lying (and thereby risking punishment for perjury).  The privilege against self-incrimination also reflects the fundamental principle of the accusatorial system of criminal justice that the prosecution bears the onus of proving, beyond a reasonable doubt, that an accused is guilty.  As fundamental as the privilege against self-incrimination is, when it is abrogated by legislation because of a perceived public interest which justifies its abrogation, and no protections against the use in evidence of answers are enacted, it may be inferred that the legislature intended that such answers may be used as evidence in a subsequent criminal proceeding.
  5. Because answers obtained compulsorily in circumstances in which the privilege against self-incrimination is abrogated may be used for a variety of purposes, in some contexts the legislative intent that such answers may be used in evidence in a subsequent criminal proceeding may not be sufficiently explicit.  Where, however, a provision such as s 350-50 of the TAA authorises the disclosure of compulsorily obtained evidence for the purpose of certain proceedings, including criminal proceedings, the legislative intent that lawfully obtained answers may be used for the purpose of obtaining the conviction of the examinee on a criminal charge is apparent.

Voluntariness rule - summary

  1. The voluntariness rule applies in cases in which a questioner is not entitled by law to demand answers and the person being questioned is entitled to exercise the “right to silence” and the privilege against self-incrimination.  Those fundamental rights justify a rule of evidence by which the prosecution is obliged to prove that a confession or admission was voluntary, namely that it was the “exercise of a free choice to speak or be silent”.  Those considerations and the voluntariness rule do not apply in the different legal context of a questioner who is able to demand answers, including incriminating answers.
  2. The appellant did not contend in supplementary submissions that lawfully obtained answers from a compulsory examination conducted for a proper purpose at which the examinee is obliged to answer and the privilege against self-incrimination is abrogated are prima facie inadmissible.  The authorities of R v Owen and R v Zion support the proposition that answers given in such a context are not subject to the voluntariness rule and are prima facie admissible.

Discretionary exclusion

  1. Even if a statement is voluntary, and therefore admissible, a trial judge has a discretion to reject it if it was obtained in circumstances that would render it unfair to use it against the accused.[129]  In addition, a discretion exists to ensure that the accused receives a fair trial.  The question is not whether the evidence has been fairly obtained, but whether it would be unfair to use the evidence against the accused.[130]
  2. In McMunn v The Queen,[131] an examination conducted pursuant to s 264(1)(b) of the Income Tax Assessment Act 1936 was admitted at trial, the trial judge having concluded that there was no privilege against self-incrimination and the interview was not shown to have been conducted for a purpose other than that authorised by s 264.  The Victorian Court of Appeal upheld the trial judge’s conclusion that there was no unfairness as should lead to the record of interview being excluded.  That conclusion was said to be “unassailable”.[132]
  3. The appellant did not advance arguments to the primary judge seeking the exclusion of the compulsory examination in the exercise of a discretion on the grounds of unfairness.  He advances no argument in his supplementary submissions as to why incriminating evidence in the form of his compulsory interview should have been excluded on the grounds of fairness.  Instead, he advances arguments based upon authorities such as De Vonk and X7.  However, as Hayne and Bell JJ explained in X7, the issues in that case did not raise questions of fairness but whether the legislation permitted questioning of a person who was then facing a criminal charge.[133]
  4. Whether one is concerned with an aspect of the unfairness discretion or a public policy discretion, the appellant does not contend that the questioning was oppressive.  He did not seek the exclusion of the compulsory interview on the grounds that he was not treated fairly before or during the interview, or that the interview was conducted for an improper purpose.  The uncontested evidence before the trial judge was that the interview was conducted to inquire into anomalies arising from an audit of certain BAS forms lodged by the appellant.  It is not argued that any aspect of the examination was conducted in a manner which would justify exclusion on the grounds of unfairness.  The appellant has not demonstrated that the conduct of the examination was improper based upon what the auditors knew, or ought to have known, about the possibility that the appellant might later face criminal charges as a result of further ATO investigations.
  5. The examination was conducted in March 2010 for a proper purpose and was not improperly conducted.  It occurred when no criminal charges were pending against the appellant.  The subsequent disclosure in September 2011 of the examination to the CDPP of the purpose of a contemplated criminal proceeding, based upon extensive further investigations by the ATO, was authorised by s 355-50 of the TAA.  The appellant has not shown a basis upon which the evidence of the examination was rendered inadmissible in the exercise of a discretion to exclude.

Conclusion – first ground of appeal

  1. In summary:
  1. The appellant was lawfully compelled to answer questions by ATO auditors on 10 March 2010.
  1. The audit examination was conducted for a proper purpose, and at a time when the appellant was not facing any criminal charges.  The appellant has not demonstrated that the conduct of the examination was improper.
  1. The appellant was required to answer questions, even if the answers incriminated him.
  1. The legislation which abrogated his right to silence and the privilege against self-incrimination did not provide that the answers so obtained were inadmissible in a subsequent proceeding.  Instead, s 355 of the TAA regulated the disclosure of the contents of his examination and, by way of exception to a general prohibition on disclosure of such “protected information”, authorised disclosure of the compulsory examination to the CDPP for the purpose of criminal proceedings related to a taxation law.
  1. The disclosure of the examination by the ATO to the CDPP in September 2011 was for such a purpose, and the use of the examination in the contemplated criminal proceedings was thereby authorised.
  1. The use of the evidence at the appellant’s trial was not prohibited on the basis that the disclosure of the evidence for use in criminal proceedings was unauthorised, contrary to a statute or order restricting such disclosure or otherwise unlawful.  To the extent the disclosure and use of the evidence prejudiced the appellant’s defence, by providing evidence of lies or his explanation for transactions related to the taxation affairs of two trusts on whose behalf he obtained GST refunds, the disclosure and use was authorised by s 350-50 of the TAA.
  1. The evidence was lawfully obtained and lawfully disclosed to the CDPP.  No basis existed for its discretionary exclusion at trial.
  1. The voluntariness rule, if applicable to statements which appear exculpatory but which are in fact incriminating, does not apply to statements obtained under lawful and proper compulsion.
  1. The relevant evidence, though compulsorily obtained, was admissible at the appellant’s trial.
  1. The 2014 application for a stay or other orders to ensure the prosecution proceed without the advantage of the compulsorily obtained evidence was properly refused.
  1. The appellant has failed to establish his first ground of appeal.  If the appellant had succeeded in establishing that the compulsorily obtained evidence should not have been used at his trial and, as a consequence, a miscarriage of justice occurred, the appropriate order would have been for a re-trial.  The prosecution of the appellant did not depend only upon the evidence obtained at the compulsory examination.

II. The appeal against the refusal to order separate trials

  1. In February 2017 the appellant brought an application in relation to the joinder of the State fraud count with the Commonwealth offences and sought a separate trial of the State fraud count.  Although he argued that the single State count was not properly joined with the Commonwealth counts in accordance with s 567(2) of the Criminal Code (Qld), his principal argument was that the Court should exercise its discretion to order separate trials because a trial on all charges would prejudice his defence.
  2. The application was refused.  Paragraph 2.4 in his notice of appeal contends that the learned trial judge erred in not separating Count 44 of the indictment from Counts 1 – 43 and in not ordering separate trials, with the result that his trial miscarried.
  3. In dismissing the application on 16 February 2017, the judge concluded that there was “a sufficient nexus and commonality of fact” between the charges.  The fraud in respect of the trust account (Count 44) was alleged to have been committed to repay the ATO in respect of dishonestly obtained refunds of GST to which the appellant was not entitled.  His Commonwealth offences provided a motive to fraudulently use trust account moneys held on behalf of an estate to repay money which he had fraudulently obtained from the ATO, purportedly on behalf of two trusts.  The learned primary judge pointed out that the prosecution could lead evidence of the dishonesty with respect to the ATO as a motive in relation to Count 44 and, in addition, his conduct in respect of the trust account could be relied upon as evidence of a consciousness of guilt in relation to Counts 1 to 43.
  4. As to the discretion to order separate trials on the grounds of prejudice, including the prejudice of having one of the executors give evidence about the lack of authority to withdraw certain sums from the trust account, the primary judge concluded that any prejudice with respect to a possible defence in respect of whether authority was given arising from evidence led in relation to Counts 1 to 43 could be appropriately addressed by judicial directions, including a warning in relation to propensity and circular reasoning.
  5. The learned primary judge also addressed alleged prejudice arising from the need to give different directions to the jury in relation to the test for “dishonesty” in respect of the Commonwealth charges and the State charge.  However, the primary judge did not think that the need to do so prejudiced the appellant.  This was because the direction in relation to the State charge required the prosecution to prove an additional element, and the jury would also be directed about the need to consider each charge separately.  The need to give different directions in relation to different offences was not an unusual feature in relation to indictments carrying a large number of charges.
  6. The primary judge gave further reasons as to why he would not exercise his discretion to order separate trials.
  7. The appellant’s written submissions on the appeal fail to engage with the primary judge’s reasons, and there were no submissions in reply to the respondent’s submissions on this ground.  The appellant’s written submissions, which were not supplemented with oral submissions, were that there are “no common issues of principal (sic) or law between Counts 1 – 43 and Count 44”.  However, joinder is permitted in respect of common issues of fact where there is a sufficient nexus between the charges.[134]  The appellant has not shown that the primary judge erred in concluding that the 44 dishonesty offences had “a sufficient nexus and commonality of fact” to be joined under s 567(2).
  8. As to the discretion to order separate trials, the appellant’s written submissions on the appeal simply re-state the argument that there was:
  1. a danger of circuitous reasoning of having committed either Counts 1 to 43 or Count 44 due to the appellant’s alleged involvement in the other; and
  1. the different test of “dishonesty” under the different laws.

The appellant’s submissions do not contest the primary judge’s finding that the prosecution would be entitled to call evidence of the conduct that constituted his dishonesty in respect of the ATO at a separate trial of Count 44, and that the prosecution would be entitled to call evidence of his dishonesty in respect of the trust account at a separate trial of Counts 1 to 43 as showing a consciousness of guilt in relation to those offences.  The appellant does not address the absence of prejudice arising from different tests of dishonesty.

  1. The appellant has not demonstrated that the primary judge’s discretion to not order separate trials in respect of Count 44 miscarried.

III. The absence of jury directions about exculpatory provisions

  1. The next ground of appeal is that, despite no request having been made by the appellant’s trial counsel to leave a defence pursuant to s 22 of the Criminal Code (Qld) with respect of Count 44, the learned trial judge erred in not leaving that defence to the jury.  A similar ground of appeal argues that, despite the trial judge not being requested to put the exculpatory provisions contained in ss 9.1, 9.2 and/or 9.5 of the Criminal Code (Cth) with respect to Counts 1 – 43, the learned trial judge erred in not leaving these provisions to the jury.

Should the jury have been directed about s 22 of the Criminal Code (Qld)?

  1. The appellant contends that the learned trial judge erred in not leaving the exculpatory provision contained in s 22(2) of the Criminal Code (Qld) to the jury to consider in respect of Count 44, and a miscarriage of justice occurred because the jury was not directed in respect of the application of that provision.  He argues that, based upon s 22, the jury should have been directed that a verdict of guilty for Count 44 depended upon satisfaction beyond reasonable doubt that the appellant did not honestly believe that he was entitled pursuant to a signed authority given by Mr De Graff to deal with the funds held on trust, and that he did not honestly believe that he was entitled to gain the pecuniary benefits that were the subject of the fraud count whilst in possession of a written authority.
  2. The respondent points out that there was no evidence that the appellant believed (honestly or otherwise) that he had the authority to take the funds from the trust account.  He gave no evidence at the trial.  The money in question was transferred out of the solicitor’s trust account on 8 March 2010.  In his examination by the ATO the appellant said that the source of the funds used to repay the ATO was a “loan” from Mr De Graff.  He said nothing about, and was not asked by the ATO auditors about, any trust account authority.  Mr De Graff denied that any loan had been agreed to, and gave evidence at the trial that the appellant had asked him to sign a document headed “Trust Account Authority Estate of Audrey De Graff” in order to disburse estate funds to certain grandchildren.  His evidence was that that was the purpose of the document, and no other.  All these matters support the respondent’s contention that there was no evidence of the appellant’s belief to support a defence under s 22(2).
  3. There is, however, another reason why it was not incumbent upon the trial judge to direct the jury in terms of s 22(2) of the Criminal Code (Qld) with respect of Count 44 on the indictment.  Simply stated, proof of that count required the prosecution to prove dishonesty in respect of the trust account transaction which founded Count 44.  Proof beyond reasonable doubt of the appellant’s dishonesty with respect to the trust account transaction would, in the circumstances of this case, exclude any defence that might arise under s 22.  It is unnecessary to review the authorities in respect of the mental element required for fraud under s 408C and an honest claim of right under s 22(2) of the Code.  They were analysed in the judgments of this Court in R v Perrin.[135]
  4. The real issue on the trial of Count 44 was whether the prosecution had established the appellant’s dishonesty.  The jury’s verdict involved an acceptance of Mr De Graff’s evidence about the circumstances under which he came to sign the trust account authority, that he did not loan the appellant the sum of $1,000,000, either in his own capacity or in his capacity as executor, and that he did not authorise the transfer of $1,193,271 from the estate’s trust account on 8 March 2010.  There was other evidence supporting the dishonest use of the trust account, including the appellant’s supply of a false document which purported to be a bank statement in March 2011, which evidenced an attempt by the appellant to “cover his tracks”.
  5. Proof beyond reasonable doubt of his dishonesty had the effect of displacing any s 22 defence.  Notably, there was no request by the experienced defence counsel at trial for the trial judge to give a direction as to s 22(2) of the Code.  The directions given at the trial adequately dealt with the real issue of dishonesty in respect of Count 44.  On the hearing of the appeal the appellant’s counsel could not say how the outcome of the trial could have been any different if a direction had been given in respect of the s 22 defence in circumstances where the prosecution proved dishonesty.
  6. The learned primary judge did not err in not directing the jury with respect to s 22(2) of the Criminal Code (Qld).

Should the jury have been directed about exculpatory provisions contained the Criminal Code (Cth) with respect to Counts 1 to 43?

  1. Similar arguments arise in this context.  The prosecution called evidence in proof of the Commonwealth offences of dishonesty.  The appellant did not give or call evidence at the trial concerning his belief with respect to the transactions in relation to Counts 1 to 43.  The real issue at the trial was whether the prosecution had proved the appellant was dishonest in the respects alleged in relation to each count.
  2. As noted at the start of these reasons, the prosecution case was that the appellant lodged each BAS, claiming refunds of GST on behalf of two trusts, when he knew that those trusts had not incurred expenses by way of purchase in respect of property developments.  The prosecution case also was that, when asked by the ATO to substantiate the expenses claimed, the appellant submitted tax invoices which he knew were false.  The documents were provided to the ATO, usually under covering letter from the appellant’s firm.  An inference was that the appellant created them.
  3. The appellant’s position at the time he was interviewed in March 2010, and the position he maintained at trial, was that he was not aware that the invoices used to calculate the GST refunds in each BAS were false.  The explanation given by him in his interview with the ATO in March 2010 was that he submitted the numerous BAS documents on the instructions of the “trustee”, a man named Zheng Fu.  In the interview he referred to him as “Fu Zheng”.  Zheng Fu was called as a witness and denied that he was a trustee of either trust and denied giving any such directions to the appellant.  He also denied giving the appellant any documents, said he had no knowledge of the trusts and denied signing relevant documents.  Other witnesses were called and shown documents purportedly signed by them, and denied that the signatures on the documents were theirs.
  4. The prosecution case did not depend upon proving that the appellant personally created false invoices or that the false signatures were written by him.  Such inferences were open.  It was sufficient for the prosecution case to prove that the appellant knew that the invoices were false and knowingly submitted them.  The prosecution case included evidence from forensic IT specialists who examined the appellant’s computers, phones and documents that were seized as part of the investigation.  The evidence included documents which were created on dates when Zheng Fu was not in Australia.
  5. The jury was persuaded by the prosecution case that the appellant was dishonest in the respects alleged in relation to each count.  This involved a rejection of explanations given by him during his interview with the ATO in March 2010.
  6. In the circumstances of this case, proof of the appellant’s dishonesty effectively displaced the exculpatory provisions of the Criminal Code (Cth).  Given the real issues at the trial, it is unsurprising that no direction was sought with respect to those exculpatory provisions.  The learned primary judge did not err in not directing the jury in terms of those provisions.

IV. The appeal about authority

  1. The final ground of appeal, added by leave at the hearing, is that the learned trial judge erred in directing the jury on 15 May 2017 as to what the prosecution was required to prove to satisfy the element of the offence charged in Count 44.  The appellant argues that a miscarriage of justice occurred when the jury was told that the prosecution had to prove that the appellant took some money without the authority of “one of the executors”, instead without the authority “of an executor”.
  2. The appellant, as a solicitor, had funds in his trust account which were part of the proceeds of the Estate of Audrey De Graff.  The executors of the estate were Mr Warwick De Graff, Mr Lincoln-Smith and Mr Andrew Brown, who was a partner of the appellant’s firm until 2008, when he left due to ill health.  There was no suggestion that, at the relevant time, Mr Brown was involved in the affairs of the estate or was given any authority to deal with the relevant funds.  The evidence was that Mr Lincoln-Smith allowed his brother, Mr De Graff, to deal with the appellant in respect to the estate.  There was no evidence that Mr Lincoln-Smith, as an executor, had authorised the appellant to take the funds.  Mr Lincoln-Smith gave evidence that he was not approached by the appellant for a loan of $1 million or more, did not authorise the appellant to make any withdrawal from the estate and did not authorise the transfer of $1,193,271 from the relevant account.  Incidentally, Mr Lincoln-Smith gave evidence that he spoke to the appellant in about March 2010 about releasing the money in the trust account and the appellant “strongly advised” him to keep the funds in the trust account to meet any tax liabilities.
  3. The appellant’s position was not that he had any authority from Mr Brown or Mr Lincoln-Smith to withdraw funds from the trust account.  His position, based upon what he said at the interview with the ATO, was that he reached an informal loan agreement with Mr De Graff to borrow the sum of approximately $1 million which was needed to refund the ATO.  In the interview the appellant did not refer to any trust account authority, but a possible inference at the trial was that a trust account authority was signed by Mr De Graff to facilitate the advance of the loan.  Of course, any such loan would have been one made on behalf of the estate, not by Mr De Graff personally.  In any event, Mr De Graff’s evidence was that he was never approached by the appellant to obtain a loan and did not lend the appellant a sum of $1 million or more.  As to the trust account authority, his evidence was that he signed it after being told by the appellant that it was necessary for him to sign it in order to disburse estate moneys to the grandchildren.
  4. The real issue at the trial was whether the prosecution established that Mr De Graff had not given authority to the appellant to withdraw the sum of $1,193,271 from the trust account held on behalf of the estate, being a withdrawal that occurred on or about 8 March 2010, for use by the appellant.  There was no direct evidence from the appellant about the circumstances under which the trust account authority which became Exhibit 65 came to be signed.  His case depended upon the inference that it was signed to facilitate the alleged loan to which he referred in his ATO interview.
  5. The trial judge gave appropriate directions on the question of authority and other elements of the fraud offence.  In the course of its deliberations, the jury asked a question:

“If permission has been verbally given to take money out of a trust account for an estate, is it legal to take?”

  1. After consulting counsel, the learned trial judge directed the jury:

“It doesn’t have to be written authority; it can be verbal authority.  But – and as I say, it’s one of the elements of the offence.  As you can see, the wording of it – that he did dishonestly apply to his own use money belonging to the three executors of the estate – well, that means the Crown’s got to prove that he took that money without the authority of one of those executors.  …”  (emphasis added)

No complaint was made by trial counsel about this direction, and no further direction was sought in relation to the question of authority.

  1. The appellant now says that the trial judge should have said that the prosecution had to prove that the money was taken “without the authority of any of the executors”, rather than “without the authority of one of those executors”.  In the context of a trial where the real issue was whether Mr De Graff gave the necessary authority, this appears to be a semantic point.  The jury would not have understood the direction given as suggesting that the necessary lack of authority would be shown if the jury was satisfied, for example, that Mr Brown did not give the necessary authority, but Mr De Graff did.  In the context of the trial the jury would have understood that the direction meant that the Crown case would fail unless it proved that the appellant took the money without the authority of any one of the executors.  It would have understood that neither party was claiming that Mr Brown or Mr Lincoln-Smith had given the necessary authority.
  2. In the circumstances, it is unsurprising that no further direction was requested at the trial.  The direction and the redirection was sufficient to instruct the jury that it would be sufficient to defeat the prosecution case if it could not exclude the fact that Mr De Graff gave authority, either written or oral, in his capacity as executor for the moneys which were withdrawn from the trust account to be withdrawn.  There was no miscarriage of justice as a result of the direction in relation to the issue of authority.  The jury was satisfied on the basis of Mr De Graff’s evidence that he did not give the necessary authority.  The evidence about the administration of the estate proved an absence of authority and other evidence proved that the appellant acted dishonestly in using more than $1 million of moneys held on trust for his own benefit so that he could repay money which he had defrauded from the ATO.

Conclusion

  1. I would order that the appeal be dismissed.

Footnotes

[1]  (2003) 215 CLR 643 at [5] per Gleeson CJ.

[2]  (2013) 248 CLR 92.

[3] Deputy Commissioner of Taxation v de Vonk (1995) 61 FCR 564.

[4] supra, at [147].

[5] supra, at [159].

[6] ibid.

[7] supra, at [162].

[8]  [2013] NSWCCA 42.  X7 was argued on November 7 2012 and decided on 26 June 2013; R v Seller & McCarthy was argued on 14 and 16 November 2012 and decided on 1 March 2013.

[9] Seller, supra, at [34], quoting the trial judge’s findings.

[10] supra, at [36].

[11] supra, at [37]-[38].

[12]  (1983) 152 CLR 281 at 294.

[13] supra, at [35].

[14] supra, at [115].

[15]  Special leave was sought to appeal to the High Court against this decision but was refused on the basis that the appellants would not enjoy sufficient prospects of upsetting the finding of fact that the trial would not suffer from a fundamental defect as a result of the wrongful delivery of transcripts of the examination: [2013] HCA Trans 204 per Hayne, Bell and Gageler JJ.

[16]  (2013) 251 CLR 196.

[17]  French CJ, Crennan, Gageler and Keane JJ; Hayne, Kiefel and Bell JJ dissenting.

[18] supra, at [56] per French CJ, at [144] per Crennan J, and at [330] to[335] per Gageler and Keane JJ.

[19]  (2014) 253 CLR 455.

[20] supra, at [8].

[21] supra, at [10].

[22] ibid.

[23]  French CJ, Crennan, Kiefel, Bell and Keane JJ.

[24] supra, at [19].

[25] supra, at [34].

[26] Ibid.

[27] supra, at [39].

[28]  (2013) 232 A Crim R 337 at [149].

[29]  (2012) 246 CLR 469 at [54] per Gageler J.

[30] supra, at [43].

[31] supra, at [51].

[32]  (1995) 61 FCR 564.

[33]  (2012) ATC 20-345; [2012] FCAFC 126 (Edmonds, Perram and Jagot JJ).

[34] supra, at 576F-G.

[35] supra, at 576G.

[36] supra, at 588F.

[37] supra, at 589A.

[38] supra, at 576G.

[39] supra.

[40] supra.

[41] supra.

[42] supra.

[43] supra.

[44]  The special position under bankruptcy and company legislation is not material here for the reasons of history explained by Kiefel J in Lee (2013) at [244]-[252].

[45]  (1908) 7 CLR 277 at 304.

[46] supra, at [86].

[47]  (2004) 221 CLR 309 at [21].

[48]  [2007] VSCA 149.

[49]  (2001) 48 ATR 390, a decision of the New South Wales Court of Criminal Appeal.

[50]  [1986] VR 609.

[51] Clough v Leahy (1905) 2 CLR 139 at 156 per Griffith CJ.

[52] McGuinness v Attorney-General (Vic) (1940) 63 CLR 73; The BLF Case (1982) 152 CLR 25; Hammond v The Commonwealth (1982) 152 CLR 188; Sorby v The Commonwealth (1983) 152 CLR 281; Hamilton v Oades (1989) 166 CLR 486; EPA v Caltex (1993) 178 CLR 477.

[53] X7, supra, at [142].

[54] supra, at [159].

[55] ibid.

[56] X7, supra, at [124].

[57]  Other States and Territories have their analogues.  Cf. Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at [50]-[53] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ.

[58] X7, supra, at [116]-[117].

[59] X7, supra, at [136] per Hayne and Bell JJ, [161] per Kiefel J.

[60] Hammond v The Commonwealth (1982) 152 CLR 188 at 198 per Gibbs CJ.

[61] X7, supra, at [123].

[62] X7, supra, at [142] per Hayne and Bell JJ.

[63] Binetter v Deputy Commissioner of Taxation (2012) 206 FCR 37 which, in turn, followed Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564.

[64] R v Seller [2013] NSWCCA 42 at [77]–[78], [104]–[105], [119] [120], [121], [135] (“Seller”); X 7 v Australian Crime Commission (2013) 248 CLR 92 at [97]-[101], [124], [134], [160] (“X7”); Lee v New South Wales Crime Commission (2013) 251 CLR 196 at [1] and [54] (“Lee v NSWCC”); Lee v The Queen (2014) 253 CLR 455 at [31]-[33] (“Lee v The Queen”).

[65] Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564 (“De Vonk”).

[66] Seller; see also R v Seller (2015) 89 NSWLR 155.

[67] R v Leach [2014] QDCPR 1 at [40] (“R v Leach”).

[68]  At [9] – [18], [31], [41].

[69]  At [48].

[70]  At [5].

[71]  (2012) 206 FCR 37.

[72] De Vonk.

[73] Sorby v The Commonwealth (1983) 152 CLR 281 at 294.

[74] Seller at [104]-[105]; X7 at [124]; Lee v NSWCC at [44].

[75]  The authorities of Binetter and De Vonk concern s 264 of the Income Tax Assessment Act 1936 but no submission is made that the position in s 353-10 of the TAA is any different.

[76] R v Leach at [28].

[77]  At [9] – [18], [41] – [54].

[78] R v Leach at [47].

[79]  At [46].

[80] De Vonk at 584 per Hill and Lindgren JJ.

[81]  At 588.

[82]  At 588-589.

[83]  At 568.

[84]  Ibid.

[85] X7.

[86] Lee v NSWCC.

[87] Seller.

[88] Lee v The Queen.

[89]  See, for example, R v Seller (2015) 89 NSWLR 155; R v Elfar [2017] QCA 149 and NS v Scott [2017] QCA 237.

[90] X7 at [97] – [99]; [160].

[91] Lee v NSWCC at [1] and [37].

[92] X7 at [105], [124], [136].

[93] Lee v The Queen at [31].

[94] X7 at [162].

[95]  See R v Seller (2015) 89 NSWLR 155.

[96] Lee v The Queen.

[97]  At 463.

[98]  At 467 [32].

[99]  Ibid.

[100]  At 467 [33].

[101]  At 473 [51].

[102]  Ibid.

[103]  Compare s 18B(2) of the NSW Crime Commission Act considered in Lee v The Queen.

[104]  As the respondent submitted to the primary judge, the CDPP does not have as a function the investigation of offences; its functions concern prosecutions: Director of Public Prosecutions Act 1983 (Cth) s 6.

[105]  (2007) 231 CLR 396 at 411 [28] (footnotes omitted).

[106]  [1951] VLR 393 at 395.

[107]  [1986] VR 609.

[108] The Queen v Swaffield (1998) 192 CLR 159 at 189.

[109]  J D Heydon, Cross on Evidence (Lexis Nexis) [33595].

[110] McKay v The Queen (1935) 54 CLR 1 at 9.

[111]  J D Heydon, Cross on Evidence (Lexis Nexis) [33595].

[112]  384 US 436 (1966) at 477.

[113]  [1971] SCR 23.

[114]  [1997] 1 VR 1 at 52.

[115]  In some statutory contexts the term “confession” has an extended meaning and includes any statement which is partly adverse to the person who made it.  See, for example, the Police and Criminal Evidence Act 1984 UK discussed in R Munday Adverse Denial and Purpose of Confession [2003] Crim LR 850.

[116] R v McKay [1965] Qd R 240; R v Doyle ex parte Attorney-General [1987] 2 Qd R 732.

[117] R v Dixon (1992) NSWLR 215 at 229.  See also J D Heydon, Cross on Evidence (Lexis Nexis) [33595].

[118] R v Burt [2000] 1 Qd R 28 at 31[1], 32[7], 41[39]-42[45].  cf R v Kassulke [2004] QCA 175 at [20]-[21].

[119] McDermott v The King (1948) 76 CLR 501 at 511-512; R v Lee (1950) 82 CLR 133 at 149.

[120]  [1951] VLR 393.

[121]  At 395.

[122]  Ibid.

[123]  [1986] VR 609.

[124]  At 612.

[125]  At 612 citing R v Scott (1856) Dears and Bell 47 at 59; 169 ER 909 per Lord Campbell CJ.

[126]  At 614.

[127] X7 at [121].

[128]  Various rationales for the privilege are discussed in Queensland Law Reform Commission, The Abrogation of the Privilege Against Self-Incrimination (December 2004) Report No 59, Chapter 6.

[129] Cleland v The Queen (1982) 151 CLR 1 at 5.

[130] R v Swaffield (1998) 192 CLR 159 at 189.  See also R v Cowan [2016] 1 Qd R 433 at 479 [74] - 482 [88].

[131]  [2007] VSCA 149.

[132]  At [71].

[133] X7 at 127 [69].

[134] R v Cranston [1988] 1 Qd R 159.

[135]  [2017] QCA 194.

Editorial Notes

  • Published Case Name:

    R v Leach

  • Shortened Case Name:

    R v Leach

  • MNC:

    [2018] QCA 131

  • Court:

    QCA

  • Judge(s):

    Sofronoff P, Philippides JA, Applegarth J

  • Date:

    22 Jun 2018

  • Selected for Reporting:

    Editor's Note

Litigation History

Event Citation or File Date Notes
Primary Judgment DC1479/13 (No Citation) 15 May 2017 Date of Conviction (Shanahan DCJ).
Appeal Determined (QCA) [2018] QCA 131 22 Jun 2018 Appeal allowed; convictions quashed; retrial ordered: Sofronoff P and Philippides JA (Applegarth J dissenting).

Appeal Status

{solid} Appeal Determined (QCA)